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TMI Blog2021 (8) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... er framed u/s 143(3) r.w.s. 148 dated 12.12.2016 can neither be held as erroneous nor prejudicial to the interest of revenue. We hold that Ld. Pr. CIT wrongly assumed jurisdiction u/s 263 and therefore the impugned order deserves to be quashed. We accordingly restored the assessment order dated 12.12.2016 framed u/s 143(3) r.w.s. 148 of the Act. - Decided in favour of assessee. - ITA No. 659/Ind/2019 - - - Dated:- 29-7-2021 - SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER Appellant by : Shri S.S. Deshpande, AR Revenue by : Shri S.S. Mantri, CIT-DR ORDER PER MANISH BORAD, A.M: By way of this appeal, the appellant has challenged the assumption of jurisdiction u/s 263 of the Income Tax Act 1961( hereinafter referred to as The Act for short) by Ld. Pr. CIT, Ujjain vide order dated 27.03.2019.The assessee has raised following grounds of appeal:- 1. The order passed by the Ld. Pr. CIT is illegal and bad in law and hence be set aside. 2. The Ld. Pr. CIT has erred in passing the order u/s 263 on the ground that the order passed by the Ld. AO is erroneous and prejudicial to the interest of the revenue. 3. Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after a lapse of nearly 8 years. (4) The Assessing Officer has not examined on oath to Shri Sai Das,n S/o. Shri Kalusingh Kakota with regard to his capacity to purchase such land. In view of the above, the assessee has not properly explained the cash deposited in the saving bank account of ₹ 32,00,000/-. In the light of entire facts discussed above, I am of the considered view that the assessment order passed u/s 143(3)/147 on 12.12.2016 for the A Y. 2009-10 in your case is erroneous as well as prejudicial to the interest of revenue, which requires to be revised u/s 263. 4. During the course of proceedings u/s 263 of the Act assessee could not file any new evidence except those filed before Ld. AO. the impugned show cause notice was centered towards a transactions of sale proceeds of agricultural land situated at Tigriya Sancha owned by the assessee. The assessee filed the copy of sale agricultural before the Ld. AO. However, the copy of registered sale deed was not filed before Ld. AO and also not before Ld. Pr. CIT. Further Ld. Pr. CIT also observed that ld. AO had not examined Mr. Sai Das on oath who had purchased the land. Accordingly, the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold agricultural land. 12. To examine this aspect whether Ld. PCIT has justified in holding the order of Ld. A.O as erroneous and prejudicial to the interest of revenue, we will first go through the relevant provision of Section 263 of the Act:- 263. (1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, 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. Explanation 1.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.-In computing the period of limitation for the purposes of subsection (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 13. On a bare perusal of the sub-section (1) would reveal that the powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit. Section 263(1) clearly contemplates that the order of assessment itself should be prejudicial to the interests of the revenue and this prejudice has to be proved by reference to the assessment order only. It cannot be argued that there is some possibility of the assessment order being challenged or revised in appeal and, therefore, on account of this contingency, the order becomes prejudicial to the interests of the revenue. [emphasis supplied] 16. Hon ble Apex Court in the case of Malabar Industrial Co. Ltd. [2000] 243 ITR 83 order pronounced on 10.02.2000 HEAD NOTE Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1983-84 - Whether in order to invoke section 263 Assessing Officer's order must be erroneous and also prejudicial to revenue and if one of them is absent, i.e., if order of Income-tax Officer is erroneous but is not prejudicial to revenue or if it is not erroneous but is prejudicial to revenue, recourse cannot be had to section 263(1) - Held, yes - Whether if due to an erroneous order of ITO, revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made thereon. The two questions are inter-linked and the authority exercising powers under section 263 is under an obligation to consider the entire material about the existence of income and the tax which is realizable in accordance with law and further what tax has in fact been realised under the alleged assessment orders.[emphasis supplied] 18. Hon ble Karnataka High Court in the case of V. G. Krishnamurthy [1985] 20 Taxman 65 order pronounced on 19.03.1984 Para 10 Section 263 can be invoked by the Commissioner only when he prima facie finds that the order made by the ITO was erroneous and was prejudicial to the interests of the revenue. Both these factors must simultaneously exist. An order that is erroneous must also have resulted in loss of revenue or prejudicial to the interests of the revenue. Unless both these factors co-exist or exist simultaneously, the Commissioner cannot invoke or resort to section 263. It cannot be exercised to correct every conceivable error committed by an ITO. Before the suomoto power of revision can be exercised, the Commissioner must at least prima facie find both the requirements of section 263, namely, that the order sought to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer. (vii) The Assessing Officer exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the Commissioner of Income-tax does not feel satisfied with the conclusion. (viii) The Commissioner of Income-tax, before exercising his jurisdiction under section 263 must have material on record to arrive at a satisfaction. (ix) If the Assessing Officer has made enquiries during the course assessment proceedings on the relevant issues and the assessee has detailed explanation by a letter in writing and the Assessing allows the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be held to be simply because in his order he does not make an elaborate discussion in that regard. 20. In the light of the above decisions and ratio laid down by Hon'ble Courts and examining the facts of the case we find that the case of the assessee was selected for scrutiny by issuing notice u/s 148 of the Act, specifically with regard to cash deposited in bank account. It is evident that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of agricultural land and other submissions and after making due application of mind accepted the submissions made by the assessee and assessed the income at ₹ 8,390/- vide order dated 12.12.2016 framed u/s 143(2) r.w.s. 148 of the Act. 23. We further find that under the similar set of facts and circumstances, in the case of Shri Ram Swaroop Bairagi (supra) after dealing with the provisions of section 263 of the Act and other settled judicial precedents, this tribunal quashed the order of u/s 263 of the Act and the relevant abstract of the finding is reproduced below: 20. In the light of the above decision and the ratios laid down therein and examining the facts of the case we find that the Ld. A.O vide his notice dated 3.10.2016 issued u/s 143(2) of the Act enclosed a Annexure and through point No.13, the assessee was required to explain the source of cash deposit in his saving bank account. In reply filed on 5.12.2016 the assessee has given complete details of the transaction in Para 13 14 in his reply and the same is reproduced below:- 13. As regards cash deposits in to saving bank account with Narmada Malwa Gramir Bank, Dewas, it is humbly submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould explain the source of cash deposits in the bank account by the respective assessee(s) at ₹ 19,05,000/- is established and in the family partition deed the name of three assessee(s) named S/Shri Ram Swarrop Bairagi, Sriram Vaishnav and Shailendra Vashav who are in appeal before us are appearing. Copy of sale deed dated 05.01.2008 is also available. Family partition agreement is dated 21.05.2008. The financial year in question is 2008-09. Cash is deposited on 22.5.2008, which is a day after the date of family partition agreement. The nexus of cash deposit is proved with copy of sale deed, partition deed and bank pass book. We therefore in the given facts and circumstances of the case are of the considered view that specific information was called by Ld. A.O about the alleged cash deposits and the assessee has satisfied the Ld. A.O with complete details giving the source of cash deposit in the bank account. Therefore it is neither a case of no enquiry or inadequate enquiry. Thus the order of Ld. A.O u/s 143(3) r.w.s. 148 of the Act dated 12.12.2016 framed in the case of S/Shri Ram Swaroop Bairagi, Shriram Vaishnav and Shailendra Vaishnav are neither erroneous nor prejudicia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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