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TMI Blog2024 (9) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the AO has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the decision of Nirav Modi [ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] No error or infirmity in the assessment order which could make it erroneous to the interest of the revenue. Therefore, we set aside the order of the CIT(IT) and restore that of the AOframed u/s 143(3) r.w.s. 144C - Appeal of the assessee is allowed. - SHRI NARENDRA KUMAR BILLAIYA, HON BLE ACCOUNTANT MEMBER AND SMT. KAVITHA RAJA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys that its claim of entitlement of benefit of Article 8 of India-UAE be allowed. The Appellant craves leave to add, alter, amend, substitute or withdraw all or any of the Grounds of Appeal herein and to submit such statements, documents and paper as may be considered necessary at either at or before the appeal hearing so as to enable the Hon ble Tribunal members to decide these according to the law. 3. The sum and substance of the grievance of the assessee is that, the ld. CIT erred in assuming jurisdiction u/s 263 of the Act by holding that the assessment order dt. 24/08/2021 is not only erroneous but also prejudicial to the interest of the revenue. 4. Representatives of both the sides heard at length. Case records carefully perused and the relevant documentary evidence brought on record duly considered in the light of Rule 18(6) of the ITAT Rules. 5. Briefly stated the facts of the case are that the assessee is a company incorporated in UAE and is a tax resident of UAE. Assessee is engaged in the business of operation of ships in international traffic and its operations are covered by Article 8 of DTAA between India and UAE. During the year under consideration, the assessee rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company, for the relevant AY, 3.53%, of the above said receipt is considered as income of the assessee. 7. Assuming jurisdiction conferred upon him by the provisions of Section 263 of the Act, the ld. CIT, issued the following show-cause notice:- I have called for and examined the records of I.T. proceedings in your case for A.Y 2018-2019. It is seen that the order passed u/s 143(3) r.w.s 144C (3) of the Income Tax Act, 1961 by DCIT(IT) 1 (1)(2) dates 24.08.2024 has been passed without making enquiries and verficition which should have been made. The assessment order has been passed after examininig only one charter party agreement and .... the assessee was not able to produce any charter agreement/ownership documents or pooling arrangement agreements for the remaining amount of Rs. 2,95,36,19,876/- . The AO has held that income of in land haulage charges and amount of Rs. 2,95,36,876 is income of the assessee u/s. 44B. Section 44B of the income tax states that:- 44B. (1) Not withstanding anything to the contrary contained in sections 28 to 43A, in the case pf an assessee, being a non-resident, engaged in the business of operation of ships, a sum equal to seven and a half ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT, the income computed by the AO is erroneous and prejudicial to the interest of the revenue since Section 44B of the Act is a substantial provision which clearly lays down the manner in which the income of the non-resident in establishing business has to be ascertained and income in the present case has been under assessed. 9. We have given thoughtful consideration to the contentions of the rival representatives and have considered the decisions relied upon by them. 10. Section 263 of the Act, reads as under:- 263. Revision of orders prejudicial to revenue. (1) The [Principal Chief Commissioner or Chief Commissioner or 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 [or the Transfer Pricing Officer, as the case may be,] 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, (i) an order enhancing or modifyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking 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. [Explanation 3. For the purposes of this section, Transfer Pricing Officer shall have the same meaning as assigned to it in the Explanation to section 92CA.] (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation. In computing the period of limitation for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia or through or from any money lent at interest and brought into India in cash or in kind83 cannot be definitely ascertained, the amount of such income for the purposes of assessment to income-tax84[* * *] may be calculated : (i) at such percentage of the turnover so accruing or arising as the 82[Assessing Officer] may consider to be reasonable, or (ii) on any amount which bears the same proportion to the total profits and gains of the business of such person (such profits and gains being computed in accordance with the provisions of the Act), as the receipts so accruing or arising bear to the total receipts of the business, or (iii) in such other manner as the 82[Assessing Officer] may deem suitable. 14. Section 44B of the Act and Rule 10, referred hereinabove are to be read comprehensively with the provisions of Section 90(2) of the Act, which reads as under:- (2) Where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 of the Act includes the cases where either an adequate enquiry has not been made and the same has not been recorded in the order of assessment or the said authority is circumscribed to only consider the cases where no enquiry has been conducted at all. 22. Reliance can be placed on the decision of this Court in the case of CIT v. Sunbeam Auto Ltd. [2009 SCC OnLine Del 4237], wherein, it was held that if the AO has not provided detailed reasons with respect to each and every item of deduction etc. in the assessment order, that by itself would not reflect a non- application of mind by the AO. It was further held that merely inadequacy of enquiry would not confer the power of revision under Section 263 of the Act on the Commissioner. The relevant paragraph of the said decision reads as under:- 17. 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 Commissioner of Income- tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the decision in Sunbeam Auto Ltd. (2011) 332 ITR 167 (Delhi) (page 180) : that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. No substantial question of law arises for our consideration. 24. In Ashish Rajpal as well, this Court was of the view that the fact that a query was raised during the course of scrutiny which was satisfactorily answered by the assessee but did not get reflected in the assessment order, would not by itself lead to a conclusion that there was no enquiry with respect to transactions carried out by the assessee. 25. Further, the decision of the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd., enunciates the meaning and intent of the phrase prejudicial to the interests of the Revenue , in the following words:- 8. The phrase prejudicial to the interests of the Revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy Co. v. S.P. Jain [(1957) 31 ITR 872 (Cal)], the High Court of Karnataka i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 323].) [Emphasis supplied] 26. Recently, the Hon ble Supreme Court in the case of CIT v. Paville Projects (P) Ltd. [2023 SCC On Line SC 371], while relying upon Malabar Industrial Co.Ltd., has discussed the sanctity of two- fold conditions for the purpose of invoking jurisdiction under Section 263 of the Act. The relevant paragraph of the said decision reads as under:- 27. Learned counsel appearing on behalf of the assessee has heavily relied upon the decision of this Court in the case of Malabar Industrial Co. Ltd. (supra). It is true that in the said decision and on interpretation of Section 263 of the Income Tax Act, it is observed and held that in order to exercise the jurisdiction under Section 263(1) of the Income tax Act, the Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. It is further observed that if one of them is absent, recourse cannot be had to Section 263(1) of the Act. *** 18. In light of the above, we are of the considered view that insofar as the facts are concerned, both the AO as well as the ld. CIT are on the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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