TaxTMI 
TaxTMI 
2016 (7) TMI 564
X X X X Extracts X X X X
X X X X Extracts X X X X
....h read as under:- "1.1 That on the facts and in the circumstances of the case, Commissioner of Income Tax (Central) Kanpur (CIT for short) has erred in assuming jurisdiction uls 263 of the Income Tax Act, 1961 (hereinafter called the Act for short) since he has singularly failed to point out that the assessment order dated 22.07.2011 passed by Assistant Commissioner of Income Tax, Central Circle (Meerut) (AO for short) was erroneous in so far as it was prejudicial to the interest of the Revenue as contemplated u/s 263 of the Act. 1.2 That on the facts and in the circumstance of the case, no mistake had been committed by the A0 while determining the total on money for Assessment Years 2004-05 to 2009-10 at Rs. 32,71,38,984/- and determining the undisclosed allowable expenses at Rs. 25,41,18,747/- & allocating the balance to various assessment years, is clear from the fact that such allocation of Rs. 33,45,300/- for assessment year 2004-05 has not been questioned by CIT since he has not invoked the provisions of Section 263 of the Act for assessment year 2004-05. 3. That on the facts and in the circumstances of the case, CIT erred in assuming jurisdiction u/s 263 of the Act ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the aforesaid order of the Ld. CIT passed u/s. 263 of the Act dated 28.3.2014, assessee is in appeal before the Tribunal. 6. Ld. Authorised Representative of the assessee has stated that as per the facts on record, AO while completing the assessment has taken into account and examined the seized documents and the amount of "on-money" received by the assessee. It was further stated that the expenses incurred in relation to "on-money" were also quantified by AO on the basis of the seized documents from which disallowances were made. He draw our attention towards the following points which are very important and needs to be considered. a. In this case Notice u/s 142(1) alongwith detailed questionnaire was issued by A.O. requiring the assessee to explain seized documents. Response to this was filed by the assessee on 20.10.2010 and onwards. b. With regard to the special audit, show cause notice was issued to assessee, reply to the said notice was made by the assessee vide submission dated 27.12.2010. For issues raised in the audit report dated 25.05.2011 of Special Auditor, fresh notices U/S 143(2) and 142(1) were issued, in compliance to which required details were produced.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. (2007) 295 ITR 282 (SC) g. Ranka Jewellers vs. Add CIT (2010) 328 ITR 148 h. CIT vs. Mahendra umar Bansal (2008) 297 ITR 99 (All) 6.5 It was further stated by the Ld. AR that stand of the Ld. CIT for AY 2004-05 and next five years is contradictory and is against principles of consistency and for this contention he placed reliance on the following case laws:- a Radha Soami Satsang vs. CIT (1992) 193 ITR 321 (SC) b. Berger Paints India Ltd. vs. CIT (2004) 266 ITR 99 (SC) c. UOI & ORS. vs. Kaumudini Narayan Dalal & Anr. (2001) 249 ITR 219 (SC) d. CIT vs. Shivsagar Estate (2002) 257 ITR 59 (SC) : (2002) 124 TAXMAN 606 (SC) 6.6 The Ld. AR of the assessee stated that the disallowance uls 40A(3) and denial of deduction uls 80-IB being matters considered and decided in appeal, cannot be subjected to revision jurisdiction in terms of clause (c) of the Explanation to section 263(1). For disallowance uls 40A(3), the Ld. CIT(A), vide his letter dated 27.11.2012 directed the Ld. A.O to send a remand report after verifying the aforesaid expenditure from the seized documents. Vide remand report dated 24.01.2013, the Ld. A.O. had reported that "the payments made under ru....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eceiving 'on money' on the sale of flats and this 'on money' was to be computed on the basis of the documents seized during the course of search. She has stated that the deduction allowed against this income has not been correctly computed as per the provisions of the Income tax Act 1961. Thus an error has been committed in computation of income which is caused prejudice to the interest of the Revenue as income has been determined at a lower figure. In support of her arguments, she also draw our attention to para no. 3 page no. 2 of the impugned order and relied upon the order of the ITAT, Hyderabad Bench 'A' in the case of Leo Meridian Infrastructure Projects & Hotels Ltd. vs. DCIT passed in ITA No. 1254(Hyd.) of 2011 & 1872 (Hyd.) of 2012 dated 28.3.2013. Accordingly, she stated that the order passed by the AO is erroneous as well as prejudicial to the interest of the Revenue. Accordingly, she requested that the impugned order passed u/s. 263 of the Act passed by the Ld. CIT may be upheld and appeal of the assessee may be dismissed. 8. We have carefully considered the rival submissions and perused the relevant records available with us, especially the impugned ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../shops has been given. This chart takes care of the on money and the other undisclosed income which have been shown in many documents repeatedly. This chart is also part of the assessment order. In this way repetition has been sought to be taken care of. From the seized documents in the case of the assessee and the chart submitted by the assessee itself total undisclosed income from A. Y. 2003-04 to 2009-10 comes to Rs. 82,71,38,984/- and out of this amount Rs. 5,68,80,271/- pertains to the year under consideration. This has been accepted by the assessee. However, the assessee has claimed deductions which includes expenses Rs. 3,49,52,143/- against this income has deposited in bank refund to the party, expenses incurred by the director on consumable etc as per the computation filed by the assessee on the return and during the assessment proceedings according to which net addition on account of incriminating documents comes to Rs. 73,14,792/-." On the examination of documents no. D-6, D7, D-10 and D-11, it was found that there were two sets of agreements out of which one set was cancelled. Total sale consideration in respect cancelled agreements was Rs. 4.09 crores, whereas in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the Act for short):- 3.1 At the very outset, it is submitted with the greatest respects that your above captioned notice is based on a mis-appreciation of facts obtaining in the case of the assessee. A perusal of the captioned notice would show that you have referred to para 8 of the Assessment Order which has been formulated by the learned AO after elaborately going through all the seized documents and further by applying his mind to the information submitted by the assessee during the course of the detailed assessment proceedings as per AO's directions. No discrepancy has not been pointed out by you in the findings arrived by the AO in para 8 of the assessment order. It is submitted that since there is no mistake in the observations of the AO in para 8 of the assessment order. It cannot be inferred that the order passed by the AO is erroneous & prejudicial to the Revenue as mandated by Section 263 of the Act. 3.2 A perusal of the above captioned notice would further show that you have inferred on an exam of documents no. D-6, D-7, D-10 & D-11 that the A 0 has held that undisclosed sales amounted to Rs. 5,68,80,278/- (i.e. not disclosed in the original books of account....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e clear from Annexure-C. Therefore, the audit report uls 142(2A) of the Act is not at all relevant as far the determination of total amount of on- money is concerned. 5. It is submitted that the learned AO has framed the AO after a detailed analysis of the seized documents and has arrived at the total quantum of on- money on the basis of all the seized documents including D-6, D -7, D -10 & D -1). You have not pointed out any discrepancy in the figures mentioned by the AO in para 8 of the assessment order. In fact, these figures -were under the consideration of Hon'ble CIT(A)-Meerut who has not found any discrepancy in these figures as would be clear from para 3.2 of his order dated 28.03.2013. In these circumstances, it is humbly submitted that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue. 6. Before parting with this matter, it is also humbly pointed out that the assessment order including the quantum of total income as a result of the onmoney found on the basis of all seized documents was the subject matter of an appeal filed by the assessee before CIT(A)-Meerut which was disposed off by him on 28.03.2013. Acc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... interest of the Revenue. Accordingly, the order passed by the AO. u/s 153A/143(3) of the IT Act is hereby set aside to be framed afresh after taking into account all the aspects of the case. (8) Since order has also been passed with the approval of the Addl. CIT, Central Range, Meerut as per the provisions of section 153D of the Act, the approval so granted is also erroneous and prejudicial to the interest of the Revenue. The same is hereby set aside to be granted afresh as per provisions of the I.T. Act, 1961." 12. After perusing the above, at the threshold, we find that that there is no dispute with regard to the following position:- a. In this case Notice u/s 142(1) alongwith detailed questionnaire was issued by A.O. requiring the assessee to explain seized documents and reply thereof was filed by the assessee on 20.10.2010 and onwards. b. With regard to the Special Audit, show cause notice was issued to assessee, reply to the said notice was made by the assessee vide submission dated 27.12.2010. For issues raised in the Audit Report dated 25.05.2011 of Special Auditor, fresh notices U/S 143(2) and 142(1) were issued, in compliance to which required details we....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... will certainly be prejudicial to the interests of the Revenue. The phrase "prejudicial to the interests 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." e) That view the Ld. CIT for AY 2004-05 and next five years is contradictory and is against principles of consistency and is against the law laid down by the Hon'ble Supreme Court of India in the case of Radha Soami Satsang vs. CIT (1992) 193 ITR 321 (SC) wherein it has been observed as under (Heads Notes only):- "Charitable Trust - Exemption under section 11 - Constitution and bye laws of assessee, a religious institution, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the case of CIT v. Mehsana District Co-operative Milk Producers Union Ltd .. It was further submitted that the decision in the case of CIT v. Shashi Theatre Pvt. Ltd. (supra) was directly on the point as the matter involved identical fact situation except for the fact that it was a case of investment allowance under Section 32A of the Act whereas the present matter relates to deduction under Section 80I of the Act. That in the aforesaid case the Assessing Officer had allowed investment allowance in relation to some of the items while disallowing investment allowance in relation to certain other items which was carried in appeal. That Commissioner (Appeals) had granted investment allowance qua the items carried in appeal. The CIT took up the matter in revision under Section 263 of the Act by only referring to those items which were not carried in appeal and on which investment allowance had been granted by the Assessing Officer. However, the principal ground forming basis of revision was that cinema theatre owned by the Assessing Officer could not be termed to be a 'small scale industry' to be eligible for investment allowance. That in revenue's reference it was held by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der passed by the learned CIT u/s. 263 totally fails to meet the jurisdictional requirements of section 263 of the I.T. Act, 1961. (i) The issue communicated to the assessee in the show cause notice was thoroughly examined at the time of original assessment and, therefore, there was complete application of mind on the part of the Assessing Officer on this issue. (ii) Further, the Assessing Officer at the time of original assessment has adopted a view which is consistent with the view adopted by the Department itself in the preceding assessment year and, therefore, the view taken by the Assessing Officer gets supported from the principles of consistency of approach when the facts and circumstances are similar. (iii) Thus, when the Assessing Officer has taken a plausible view after thorough application of mind and after making detailed enquiry, the learned CIT cannot substitute his view by assuming jurisdiction u/s.263 of the I.T. Act. 14. In the background of the aforesaid discussions and respectfully following the precedents, as referred above, we hold that the impugned order passed by the learned CIT u/s.263 of the I.T. Act is without jurisdiction and not sustainable i....