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TMI Blog2020 (5) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed by the assessee as examined by the AO. Thus, we find that this is also an ongoing transaction between the assessee and loanee. Both the parties are having regular transactions with the assessee over a period of time. Hence, the clause (a) of the Explanation II to Section 263 finds no application to the facts of the case. PCIT has not brought anything on record as to how the action of the Assessing Officer culminated in treating the assessment order as erroneous and prejudicial to the interest of the revenue. We find that the order of the AO is neither erroneous as it did not violate any provisions of Explanation II to Section 263 nor it is prejudicial to the interest of the revenue as no loss of revenue could be brought to light by the ld. PCIT in the revisionary proceedings - Decided in favour of assessee. - ITA No. 2644/Del/2016 - - - Dated:- 13-5-2020 - Sh. Bhavnesh Saini, Judicial Member And Dr. B. R. R. Kumar, Accountant Member For the Assessee : Sh. Rakesh Gupta, Adv. For the Revenue : Smt. Sushma Singh, CIT DR ORDER PER DR. B.R.R. KUMAR, ACCOUNTANT MEMBER: The present appeal has been fi led by the assessee against the order of ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. In the above case, it is humbly submitted that the following decision may kindly be considered with regard to validity of proceedings u/s 263 of I.T. Act: 1. Hon ble Supreme Court in the case of Deniel Merchants Pvt. Ltd. vs. ITO (Appeal No. 2396/2017) dated 29.11.2017. The relevant judgement of Hon ble Calcutta High Court in this case is also enclosed. In this group of cases, Hon ble Supreme Court has dismissed SLPs in cases where AO did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic show cause notice detailing specific grounds on which revision of assessment order is tentatively being proposed affecting initiation of exercise in absence thereof or to require commissioner to confine himself to terms of notice and foreclosing consideration of any other issue or question of fact; Commissioner is free to exercise his jurisdiction on consideration of all relevant facts, provided an opportunity of hearing is afforded to assessee to contest facts on basis of which he had exercised revisional jurisdiction. 7. Order of Hon ble ITAT F-Bench in the case of PTC Impex (India) Pvt. Ltd. Vs CIT. ITA No. 2860/Del/2010 dated 03.04.2018 Hon ble ITAT Delhi F- Bench has held as under: 21. We have carefully considered the rival contention and also gone through the order of the Ld. CIT u/s 263 and the order of the assessing officer passed u/s 143 (3) of the act which was subject to revision by the CIT. We have also perused the various case laws cited before us by the parties. According to section 263 of the Act, Commissioner of Income tax can resort to corrective measures by revising the assessment order passed by the Assessing Officer, if after examining records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the bills and vouchers before him. The Ld. authorized representative vehemently referred to page No. 19 of the order of the Ld. CIT (appeals) dated 15/3/2010 wherein it is stated that books of accounts and vouchers were produced before the assessing officer on 26/12/2007 and 29/12/2007 (Saturday) but not taken on record by the AO. The assessment in the present case was framed under section 143 (3) of the act on 31/12/2007. This itself shows that assessing officer has not looked at the books of accounts which are allegedly produced before AO as per version of the assessee on 26/12/2007. This too is the submission of the assessee before CIT (A) which has not been adjudicated by CIT (A). Even otherwise, mere production of books of accounts does not make the issues before us fall in to the category of inadequate inquiry . If we agree to such an argument then, in all cases where the books of accounts were produced before the Id AO, then the case would fall outside the purview ITA No. 2860/Del/2010 A Y 2005- 06 PTC Impex (India) Pvt. Ltd Vs. The Commissioner of Income tax of section 263 of the act. Further No records of communication by the AO to assessee and reply by assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not take into consideration or rely upon any report or information which may be supplied to him by the other officers of the department or on the basis of any information which he may obtain from any other source. The authority of the Commissioner to call for and examine the record on the basis of any information from any source or suo motu is purely an administrative matter. If after calling for and examining the records, the Commissioner considers that the order of the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, then subsequent proceeding acquires quasi-judicial character. On comparison of sections 263 and 264 it would be seen that in section 264 the Commissioner may, either of his own motion or on an application by the assessee, call for the records of any proceeding under the Act. However, in section 263 the expression on his own motion is absent. In the absence of such an expression and also in view of the fact that there is no restriction or limitation on the power of the Commissioner to call for and examine the record of any proceeding pursuant to the report given by the Assessing Officer or by other Departmental Officer, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Principal Commissioner of Income Tax in the present case and aptly applied in the present case. It is also held by the Hon ble Apex Court that the provisions 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. Thus, the Pr. CIT has looked into the aspect of the Assessment Order in the present case to the extent of erroneous and thus, Section 263 of the Act is attracted in the present case. Section 263 of the Act is not invoked simply for correcting mistake or error committed by the Assessing Officer in the present case. It can be observed that the Pr. CIT has considered all the contentions of the assessee and thereafter rightly come to the conclusion that the Assessing Officer failed to consider the fact that whether the assessee is entitled for claim under Section 80IC or not in respect of the products which do not come under the ambit of Fourteenth Schedule. It can be seen that the Pr. CIT has properly invoked the provisions of Section 263 and there is no procedural lapse on the part of the Pr. CIT. In fact, the Assessing Officer did not made any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duly considered for adjudication. To the notice issued by the Assessing Officer pertaining to the Long Term Capital Gains the assessee has replied that he had purchased the shares on 16/03/2012 and sold in July 2013 and received sale proceedings of ₹ 11,29,599/-. It was replied that the original shares purchased were of M/s Panchshul Marketing Ltd. which stands merged with M/s Kailash Automobile and the shares of Kailash Automobiles were allotted in the ratio of 1:1. Beyond this information there were no enquiries conducted by the Assessing Officer. The reliance of the Ld. AR on the case of Gabriel India Ltd. is of no help to the assessee as it enunciated two principles namely i.) the order is erroneous ii) by the virtue of the order being erroneous prejudice is caused to the interest of the Revenue. In the instant case there has been an information with the department which has been passed on to the Assessing Officer for verification and failure of the Assessing Officer to verify the transactions in the light of the information available makes the order erroneous and also prejudicial to the interest of the Revenue. The Assessing Officer has mentioned about inputs from invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has found to be squarely covered by the provisions of section 263 91) explanation 2 as no enquiries or verification has been conducted which should have been made by the Assessing Officer. (c) Merely because the CIT may not agree to the order of the Assessing Officer just due to change of opinion, the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue : This is not a case of the Principal CIT not agreeing to the order of the Assessing Officer and nor a case of change of opinion. In fact the Assessing Officer has nor formed any opinion in allowing the long term capital gains and practically has not examined the issue at all. (d) There is a distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even if it was inadequate, it does r ot give right to the Commissioner to pass orders under section 263 merely because of a different opinion From the assessment order questionnaire it can be unequivocally held that this is a clear case of lack of enquiry. (e) The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiry but not a case of inadequate enquiry by him. Hence, order passed u/s 263 of the act by the Id CIT is upheld and appeal of the assessee is dismissed. 6. Heard the arguments of both the parties and perused the material available on record. 7. We find that the judgments quoted by the revenue mostly pertain to the cases where the AO did not make any proper enquiry in so far as the receipt of share application money is concerned. They were the cases where the orders were patently erroneous are prejudicial to the interest of revenue. The judgments in the case of Amitabh Bachchan (supra), Infosys Technologies Ltd. (supra) are differentiated and found to be not applicable to the instant case. 8. We find that the assessee has shown the computation of assessable income as under: Income from other sources: Interest received from bonds 9,780.00 Interest received on Loan 4,402,030.00 Less: Interest paid on Loan 1,200,000.00 3,202,030.00 Meeting fees rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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