9911796707
TMI Blog2024 (10) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant will be referred hereinafter as 'Revenue' and the respondent will be referred hereinafter as 'assessee'.] 2. The assessee Company is engaged in the business of trading of Gold Ornaments, Gold Bullion, Diamond Ornaments & precious metals and derives income from them. The assessee's case was selected for compulsory scrutiny consequent upon the survey action carried out at the business premises of the assessee under Section 133A of the IT Act on 6-3-2017. During the course of survey proceedings, excess stock of Rs. 2,25,75,951/- was found which the assessee surrendered as his income for the assessment year 2017-18 and thereafter, the assessee filed income tax return for the said assessment year in response to the notice under Section 142 (1) of the IT Act declaring total income of Rs. 2,36,89,620/- as profit and gains from business or profession which includes the impugned excess stock of Rs. 2,25,75,951/-. 3. The assessee filed return of income electronically on 30-11-2018 declaring total income of Rs. 2,36,89,620/- vide acknowledgment No. 369948171200118. On 21-12-2017, a notice under Section 142 (1) of the IT Act was issued by the Assessing Officer, Central Circle to fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order is erroneous and it is prejudicial to the interest of the Revenue in view of Explanation 2 to Section 263 of the IT Act, set aside the assessment order and remanded back the matter to the AO for fresh adjudication of the issues by conducting necessary inquiries and passing fresh assessment order after giving adequate opportunity to the assessee. 5. Feeling dissatisfied and aggrieved by the order of the PCIT, invoking the revisional jurisdiction under Section 263 (1) of the IT Act, the assessee preferred appeal under Section 253 of the IT Act before the ITAT branding the same as unsustainable and stating that Section 263 of the IT Act is not attracted and thus, the learned PCIT could not have invoked Section 263. The ITAT by its impugned order dated 29-9-2021 passed in ITA No. 46/RPR/2021, allowed the appeal and set aside the order of the PCIT holding that there is no reason and justification for exercising the revisional power under Section 263 of the IT Act and restored the order passed by the AO. 6. Being aggrieved against the order of the ITAT setting aside the order of the PCIT and restoring the order of the AO, the Revenue has preferred this appeal in which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 1st day of June, 1988, by the Assessing Officer or the Transfer Pricing Officer, as the case may be, 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 or the Transfer Pricing Officer, as the case may be, 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 Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (iii) an order under section 92CA by the Transfer Pricing Officer; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner; (c) where any order referred to in this sub-section and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue, have to be satisfied. It is further held that if one of them is absent, recourse cannot be had to Section 263 (1), and observed as under:- "6. A bare reading of this provision makes it clear that the prerequisite to exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income Tax Officer is erroneous insofar as it is prejudicial to the interests of the Revenue. 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. If one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue - recourse cannot be had to Section 263 (1) of the Act. 7. There can be no doubt that the provision 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 attract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case (supra), it has to be seen whether the order of the assessing authority sought to be revised was erroneous and whether it was prejudicial to the interests of the Revenue. In the present case, the Principal Commissioner of Income Tax i.e. the revisional authority though recorded a finding that the order is erroneous and prejudicial to the interests of the Revenue, but only on the basis that no inquiry has been conducted on the issue and it smacks non-application of mind by the Assessing Officer, reached to the conclusion that the order sought to be revised is erroneous and prejudicial to the interests of the Revenue and proceeded to invoke jurisdiction under Section 263 (1) of the IT Act and proceeded to quash the order of the assessing authority. However, in appeal preferred by the assessee before the ITAT, the ITAT in paragraph 7 of the order impugned, has proposed two issues which state as under: - "7. In exercise of powers conferred under section 263 of the Act, the PCIT has proposed revision of the assessment order on two counts: i) The excess stock surrendered by the assessee during the survey, returned as business income, is liable to be considered as unexplained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess business stock found during survey proceedings under the IT Act during the year under consideration in the business premises of the assessee Company and duly recorded in the books of accounts of the concerned year, Section 69 of the IT Act would not be attracted to the assessee Company. The assessee has also stated in the reply that as far as nature and source of investments is concerned, the investments are in the form business stock of Gold and Silver Ornaments found in the business premises and explanation of the business source of investments given on the basis of documents available in the business premises during the course of survey proceedings by the Director of the assessee Company was very well verified by the survey team and accepted, and hence, the excess stock of Rs. 2,25,75,951/- declared during the course of survey proceedings in the business premises cannot be treated as unexplained investment under Section 69 of the IT Act and as Section 69 does not attract in this situation, question of applicability of tax rate of 60% under Section 115BBE of the IT Act does not arise. The AO considered the reply and found substance in the submission raised on behalf of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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