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TMI Blog2021 (11) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed by the A.O u/s 143(3) r.w.s 153A.- Decided in favour of assessee. - ITA.Nos. 278 And 281/MUM/2021, ITA.Nos. 279, 280, 282, 283 & 284/MUM/2021 - - - Dated:- 2-11-2021 - Shri Pramod Kumar, Vice President And Shri Ravish Sood, Judicial Member For the Assessee : Shri Rakesh F. Joshi For the Revenue : Shri Rahul Raman ORDER PER RAVISH SOOD, J.M The present appeals filed by the captioned assessee s are directed against the respective orders passed by the Principal Commissioner of Income Tax (Central)-3, Mumbai (for short Pr.CIT ) u/s. 263 of the Income-Tax Act, 1961 (for short Act ). As common issues are involved in the aforesaid appeals, therefore, the same are being taken up and disposed off together by way of a consolidated order. We shall first take up the appeal of the assessee, viz. Shri. Nitin Kumar Didwania for A.Y.2010-11 in ITA.No.278/Mum/2021. The assessee has assailed the impugned order on the following grounds before us: 1. On the fact and circumstances of the case as well as in Law, the Learned Principal Commissioner of Income Tax (PCIT) has erred in passing ex-parte order U/s 263 of the Income Tax Act, 1961 without providing suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit u/s 68 of the Act. Also, an addition @ 5% of the amount of the capital gain was added, on the ground, that the same would have been incurred by the assessee for availing the services of an accommodation entry provider. 4. On appeal, the CIT(A) deleted the aforesaid addition by granting telescoping benefit of unrecorded sales of the group company. 5. Thereafter, the Pr.CIT being of the view that the order passed by the A.O u/s 143(3) r.w.s 154A, dated 29.12.2017 was erroneous insofar it was prejudicial to the interest of the revenue u/s 263 of the Act, for two fold reasons, viz. (i) that the A.O had erred in not making the addition u/s 68 of the entire sale consideration of the shares and had wrongly restricted the same to the extent of capital gain therein involved; and (ii) that the quantification of the commission paid by the assessee for availing the services of the accommodation entry provider was wrongly carried out by the A.O w.r.t the amount of capital gain instead of the amount of the sale consideration of shares. Accordingly, the Pr.CIT vide his order passed u/s 263, dated 05.02.2021 directed the A.O to modify the order passed by him u/s 143(3) r.w.s 153A, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tending his revisional jurisdiction to such matters that had been considered and decided in appeal by the CIT(A). It was stated by the Ld. A.R that his contentions were confined to the aforesaid solitary issue involved in the present appeal, which glaringly revealed that the Pr.CIT had traversed beyond the scope of his revisional jurisdiction and passed the order u/s. 263 of the Act. However, on a specific query by the Bench that unlike as in the case of M/s. Ranka Jewellers (supra), as the issues involved in the present appeal i.e. whether the addition u/s 68 of the Act was to be made in respect of the entire sale proceeds of shares or was to be confined to the extent of the amount of capital gain had not been decided by the CIT(A), therefore, how the said judicial pronouncement would assist its case, the Ld. A.R failed to come forth with any plausible explanation. It was stated by the Ld. A.R that he be allowed liberty to furnish a short note in order to buttress his aforesaid contention a/w supporting judicial pronouncements. Thereafter, the ld. A.R with the permission of the bench had placed on record written submissions in support of his aforesaid contentions. 7. Per contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer] is erroneous in so far as it is prejudicial to the interest 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 on the basis of the directions issued by the [Joint Commissioner] under section 144A; (ii) an order made by the [Joint Commissioner] in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the [Principal Chief Commissioner or Chief Commissioner] or [Principal Director General or Director General] or [Princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order or injunction of any court shall be excluded. (emphasis supplied by us) 10. Admittedly, as per Explanation 1(c) to sub-section (1) of Sec. 263 of the Act, where any order passed by the A.O had been the subject matter of any appeal, then, the powers of the revisional authority shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Notably, our indulgence in the present appeal is limited to adjudication of the aspect as to what is the scope of the jurisdiction of a revisional authority under Sec. 263 of the Act after the order of assessment had been a subject matter of any appeal. As per Explanation 1(c) to sub-section (1) of Sec. 263 of the Act, once an order passed by the A.O had been the subject matter of any appeal, the powers of the revisional authority qua such order are narrowed down and thereafter shall extend only to such matters as had not been considered and decided in such appeal. Basically the controversy in the case before us hinges around the aspect as to how the term such matters as had not been considered and decided in such appeal as contemplated in Explanation 1(c) to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed under Sec. 143(3) r/w s. 144B on 31.07.1978. The ITO while framing the assessment had accepted three claims of deduction/loss of the assessee company. In the appeals filed by the assessee, the aforesaid three claims of deduction/loss of the assessee company which were accepted by the ITO were not the subject matter of the appeals. Issue before the Hon ble Apex Court was as to whether or not the order of the ITO regarding the aforesaid three claims of deduction/loss in respect of which the assessee had no occasion to prefer an appeal had merged in that of the CIT(A) so as to exclude the jurisdiction of the CIT under Sec. 263 of the Act, to which the Hon ble Apex Court answered in the negative, observing as under : 7. The consequence of the said amendment made with retrospective effect is that the powers under s. 263 of the CIT shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, even in respect of the aforesaid three items, the powers of the CIT under s. 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the entire claim of the assessee for exemption u/s 11 of the Act was at large before the CIT(A), then, the latter was vested with wide powers and jurisdiction to examine all aspects of such claim, including the power of enhancing the assessment. Backed by its aforesaid observation, the Hon ble High Court was of the view that if the revenue was of the opinion that the order passed by the A.O declining the assessee s claim for exemption u/s 11 could be sustained not on the ground on which the same was rejected by him, but on some other legal ground, then, it was open for the revenue to argue the same before the CIT(A). It was further observed by the Hon ble High Court that nothing prevented the revenue from persuading the CIT(A) to reject the claim of the assessee for exemption u/s 11 of the Act on such other legal ground. It was observed by the Hon ble High Court that by no means the CIT in exercise of his revisional powers could have initiated fresh inquiries about the same claim on the ground that one of the aspects of such a claim was not considered by the A.O. For the sake of clarity the observations of the Hon ble High Court are culled out as under: 8. According to the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer. Also, we find that a similar view had been taken by the Hon ble High Court of Gujarat in the case of CIT Vs. Nirma Chemical Works Pvt. Ltd. (2009) 309 ITR 67 (Guj). In the case before the Hon ble High Court the assessee had claimed deduction u/s 80-I of the Act, which was partially allowed by the A.O. On appeal, the CIT(A) found favor with the assessee s claim and allowed the appeal. Subsequently, the CIT in exercise of powers u/s 263 of the Act disallowed the assessee s claim for deduction u/s 80-I of the Act, on the ground, that the assets used by the assessee in the new industrial undertaking had formed part of old plant and machinery and the new industrial undertaking was formed by reconstruction or restructuring or splitting up of the old business. In the backdrop of the aforesaid facts, the Hon ble High Court held that as the requirement of fulfillment of the conditions stipulated under sub-section (2) of Sec. 80-I of the Act were very much the subject matter of the appeal in relation to the income which was disallowed by the A.O, therefore, on the ground of merger the CIT could not have exercised his revisional powers. Further, we find that a similar issue h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that CIT had no jurisdiction to exercise his revisional powers qua any such matter that had been considered and decided in appeal. Also, a similar view can be traced in the order of the Hon ble High Court of Karnataka in the case of PCIT Anr. Vs. H. Nagraja (2018) 406 ITR 242 (Kar). In its said order, it was observed by the Hon ble High Court, that the CIT in exercise of his revisional jurisdiction u/s 263 cannot once again examine the very same issue so as to disallow certain expenses that had been considered by the CIT(A), as the order of assessment made by the A.O got merged with the order of the appellate commissioner. It was observed by the Hon ble High Court that in case the revenue was aggrieved with the order of the appellate commissioner, then, the remedy available with it was to either file an appeal to the Tribunal or to re-open the assessment. Insofar the judgment of the Hon ble High Court of Bombay in the case of Ranka Jewellers (supra) is concerned, the same is found to be distinguishable on facts. In the aforesaid case as both the issues in question were evidently considered and decided by the CIT(A), therefore, it was held by the Hon ble High Court that the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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