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TMI Blog2022 (7) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Provisions] Act declaring the company as a sick industrial company. In 2006, the assessee company sought permission for disposal of surplus land of 11.02 acres from the Government of India to redeem the mounting financial burden and also to generate funds needed for its revival.The Government of India gave permission in Assessment Year 2006 for the sale of land, but the sale of land could not be completed in Assessment Year 2006-07 due to State Government s intervention for buy-back. Since the assessee company could not pay bank dues as demanded by the State Bank of India and other bankers, SBI, on behalf of consortium of banks, issued a notice dated 18.04.2009 to the company u/s. 13(3) of SARFEASI Act requiring the company to discharge its full dues and attached the assets including the freehold surplus land mortgaged to the extent of 11.02 acres. A conspectus understanding of the underlying facts clearly show that sale/transfer of land is effected by SBI under the SARFEASI Act and it has to be understood clearly that the assessee company has not sold/transferred the land of its own. It is known to everyone that SBI is a bank created by the Act of Parliament who has taken poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 3. The representatives of both the sides were heard at length, the case records carefully perused. 4. Briefly stated, the facts of the case are that the assessee company e-filed its return of income on 26.11.2014 declaring income of Rs. 6,24,10,490/- which was processed u/s. 143(1) of the Act. Return was selected for scrutiny under CASS and, accordingly, statutory notices were issued and served upon the assessee. 5. The Assessing Officer framed the assessment order u/s. 143(3) of the Act on 08.12.2016 by accepting the returned income. Invoking the powers conferred upon him by provisions of section 263 of the Act, the PCIT, Central -3 issued a notice to the assessee which reads as under: "Office of the Pr Commissioner of Income Tax (Central)-3, 325, 3rd Floor, ARA Centre, E-2, Jhandewalan Extn., New Delhi-110055, + 23593426 F. No: PCIT(C)-3/263/2018-19/30V2- Date: 19.03.2019 To The Principal Officer M/s. H.T.L Ltd. 8, Commercial Complex, Masjid Moth, Greater Kailash-II New Delhi-110048 Sir, Sub: Proceedings u/s. 263 of the Income Tax Act, 1961 for the Assessment Year 2014-15- M/s. H.T.L Ltd. (PAN: AAACH5516P) -reg. On examination of Income-tax reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was unaware of the relevant provisions of SARFEASI Act, 2002. We are of the considered view that before issuing notice u/s. 263 of the Act and before assuming jurisdiction thereupon, the PCIT ought to have gone through the underlying facts of the case in hand. If the PCIT had gone through the records of the assessee, he would have come to know that the accumulated losses of the assessee were more than the paid up capital and free reserves, the assessee company became a sick company as per the provisions of Sick Industrial Companies Act [SICA] and was referred to the Board of Industrial and Financial Reconstruction [BIFR] u/s. 15(1) of the SICA [Special Provisions] Act declaring the company as a sick industrial company. 6. In 2006, the assessee company sought permission for disposal of surplus land of 11.02 acres from the Government of India to redeem the mounting financial burden and also to generate funds needed for its revival. 7. The Government of India gave permission in Assessment Year 2006 for the sale of land, but the sale of land could not be completed in Assessment Year 2006-07 due to State Government's intervention for buy-back. 8. Since the assessee company could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2016, the Assessing Officer raised 50 queries. The relevant query for the case in hand reads as under: "Details with supporting evidence in respect of short term capital pain/loss and long term capital gain/loss." 16. The assessee replied as under: "Short Term Capital gain - Nil LT Capital gain - See computation , however reproduced below Rs. Long term capital gain (Sale of land by S8I under SARFAESI Act) Sale consideration received by SBI 272,29,08,000 Less: Cost of acquisition - Actual cost - amount paid in 1973 2,83,989 Other expenses 5,011 2,89,000 Fair market value as on 1.4.1981 taken at 15,00,000 Indexed cost of acquisition for 2013-14 140,85,000 (15,00,000x939/100) Long Term Capital gain 270,88,23,000 The land was allotted to HTL by the Tamilnadu Govt. in the year 1973. Copy of the assignment deed is enclosed as Annexure 21 (a). As per the assignment deed, the land measured was 11.021 acres. This assignment deed was converted into sale deed in the year 1993. Copy enclosed as Annexure 21 (b). This land was taken over by SBI under the SARFAESI Act. SBI has sold this land under SARFAESI Act and issued a sale certificate, which was registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s" means "involving error; deviating from the law". "Erroneous assessment" refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, "erroneous judgment" means "one rendered according to course and practice of court, but contrary to law, upon mistaken view of law; or upon erroneous application of legal principles". 12. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court it would be open to the courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nications received from his father and his sister i.e. the donors of the gifts along with the statement of their Bank accounts. On perusal, the Assessing Officer was satisfied about the creditworthiness/capacity of the donors, the source from where these funds have come and also the creditworthiness/capacity of the donor. Once the Assessing Officer was satisfied with regard to the same, there was no further requirement on the part of the Assessing Officer to disclose his satisfaction in the Assessment Order passed thereon. Thus, this objection on the part of the Revenue cannot be accepted." 22. We find that the Hon'ble Delhi High Court in the case of CIT Vs Sunbeam Auto reported in 332 ITR 167 has held as held as under: "12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the CIT under s. 263 of the IT Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the AO did not consider this aspect specifically whether the expenditure in question was revenue or capital ..... X X X X Extracts X X X X X X X X Extracts X X X X
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