TaxTMI 
TaxTMI 
2015 (10) TMI 1515
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....Various Observations and directions made by the Id. CIT in his section 263 order are either incorrect or are untenable in law and various case laws relied upon by the Id. CIT are not applicable to the appellant's case, being distinguishable on facts and the facts on records have not been considered in the right perspective thereof. 2. That, without prejudice to ground nO.1 above the various directions of Id. CIT to AO vide Para Nos.8 to 10 are also illegal, unjust and untenable in law. 3. That without prejudice to above grounds, the Id. CIT has grossly erred in law by making additions of Rs. 38,48,050/- to the income of the appellant holding that the difference between the amount as per arbitrations award and the amount declared by the appellant is the concealed income of the appellant and the finding of the Id. CIT in Para 7 page 7 "that the appellant has shown in its books of account the sum of Rs. 34,48,050/- as receivable from M/s Charms India (P) Ltd." is factually incorrect and the action of Id. CIT is perverse and has caused gross & great injustice to the appellant and that the proper opportunity of being heard on the issues has not been allowed and the....
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....imant and Mls Charms India Pvt. Ltd. as respondent. The assessee had claimed a sum of Rs. 4,12,00,11,500/- along with interest @ 18% per annum which is evident from the award dated 1.10.2007. The AO has not inquired at all about the taxability of the same. c) Further the arbitrator vide award dated 1.10.2007 has awarded a sum of Rs. 2,88,48,050/- in favor of the claimant out of which the assessee has merely shown the sum of Rs. 2.50 crores as the income from the same leaving sum of Rs. 2,88,48,050 - Rs. 2,50,00,000 = Rs. 38,48,050/-. The AO has totally failed to enquire and tax the remaining sum of Rs. 38,48,050/- and there is nothing on record as to how the sum awarded has not been returned by the assessee which did not have any justification and entire amount was taxable as such in accordance with the provisions of law. d) Further, the photocopy of the details of sundry creditors for goods of Mls. Charms India Pvt. Ltd. show the assessee sundry creditor for goods for Rs. 38,48,050/- whereas the AO has accepted the version of assessee (without any inquiry) that no business activity was all carried out by the assessee. e) Mls. Charms India Pvt. Ltd. in Sc....
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....n the light of the plain words used in section 263 of the Act. We draw support from the decision of the Hon'ble Supreme Court rendered in the case of Malabar Industries Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) and other relevant cases, we are of the considered opinion that this is not a fit case for revising the assessment order. The reasons for our above conclusion are that the twin conditions, viz., the assessment order should be erroneous in so far as it is prejudicial to the interests of revenue do not co-exist in this case. The assessee had filed return of income for the year under consideration and had disclosed the entire requisite details alongwith return of income during the year under consideration. During the assessment proceedings, the ld. AO examined all the relevant evidences produced before him, either alongwith the return or during the assessment proceedings, and has accepted the gift as genuine. The AO called for the entire details on the issue in dispute. 7.1 We find that the revisional power conferred on the Commissioner under this section is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the Act. The r....
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....enue but not erroneous, cannot be revised. To put it in, still simpler words, it is mandatory for the Commissioner to revise an order that both the above conditions must "co-exist". An order which is not "erroneous" cannot be revised even if it is prejudicial to the interest of the Revenue, and the vice-versa. 7.3 The subject of "revision U/s 263" has been vastly examined and analysed by various Courts including that of Hon'ble Apex Court. The revisional power conferred on the Commissioner vide S. 263 is of vide amplitude. It enables the Commissioner to call for and examine the records of any proceeding under the Act. It empowers the Commissioner to make or cause to be made such an enquiry as he deems necessary in order to find out if any order passed by Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue. The only limitation on his powers is that he must have some material(s) which would enable him to form a prima- facie opinion that the order passed by the Officer is erroneous in so far as it is prejudicial to the interest of the Revenue. Once he comes to the above conclusions on the basis of the 'material' that the order of the A....
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....t cannot be treated as an erroneous order, unless the view taken by the Assessing Officer is unsustainable under law. (vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the Commissioner, while exercising his power under section 263, is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. (vii) The Assessing Officer exercise quasi- judicial power vested in him and if he exercise such power in accordance with law and arrives at a conclusion, such conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. (viii) the Commissioner , 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 of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the Assessing Officer allowed the claim on being satisfied with the expla....
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....sts of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law." 7.6 The above ratio of Hon'ble Supreme Court's decision supports our finding given in this case. The Hon'ble Kolkata Bench has further clarified and defined as to what does the expressions "lack of enquiry by AO" means while deciding the case of Sigma Search Lights Ltd. vs. ITO, 82 ITTJ 956 (ITAT Kolkata). The Hon'ble Bench has observed as under :- "Revision - Erroneous and prejudicial order - Lack of enquiry by AO -An order may be brief or cryptic but if has been passed after conducting proper enquiries into the facts stat....
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....unt of Rs. 2,88,48,050/- and the balance amount of Rs. 38,48,000/- not received by the assessee was foregone and settled before due date of filing return. It was contented that the adjustment was made in terms of AS-4 issued by the Institute of Chartered Accountants of India which provides for the adjustment towards the events occurring after the date of balance sheet. The assessee, however, could not furnish any evidence or material if its claim from Charms India Pvt. Ltd. to the tune of Rs. 4.12 crores seized to exist or if no legal claim for the same remained for which no explanation was offered. On the other hand, the assessee has shown in its books the sum of Rs. 38,48,050/- as receivable from Mls Charms India Pvt Ltd. Further, the details of sundry creditors for goods of Mls Charms India Pvt. Ltd. shows the assessee as sundry credit for good for Rs. 38,48,050/-. Moreover, Mls Charms India Pvt. Ltd. in Schedule-I has claimed under the head direct construction cost the sum of Rs. 2,88,48,050/- as other project expenses of the year ending 31.3.2008 which is rather the schedule of construction and P&L Alc and, hence, undoubtedly claimed as direct expense by Mls Charms India Pvt. ....
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....he subsequent assessment year 2009-10. 7.10 We also observed from the copy of Alc of the Appellant in the books of Mls Charms India Pvt. Ltd. for the year under consideration as filed by such party before the AO in response to notice u/s 133(6) dated 11/08/2010, copy attached as Annexure-I that the Appellant received only Rs. 2,50,00,000/- out of Rs. 2,88,48,050/- as compensation on account of arbitration award during the year under consideration. 7.11 We also find that the AO's notice u/s 133(6) dated 04/10/2010 issued to M/s Charms India Pvt. Ltd. during the course of assessment proceedings says that :- "Vide this office letter dated 11-08-2010 you were asked to furnish the details in connection with Mls Singhal Construction Co. D-9, Shastri Nagar, Meerut. The requisite details were furnished by you vide your office letter dated 28/08/2010 except one information which is mentioned at S. No. 8 of this office letter dated 11/08/2010 i.e. details of ownership property mentioned in MOU dated 16/01/2006". 7.12 The details of ownership of property is duly mentioned in the first page of MOU at Sr.No.1 in which it is mentioned that "the owners (i.e. M/s Charm....