TaxTMI 
TaxTMI 
2016 (5) TMI 1334
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....ions and by following such directions, the assessee claimed the ascertained amount as liability for deduction. In view of the aforesaid decision, the assessee decided to file an appeal. It was contended that the decision from Hon'ble Madras High Court came in June 2012 in favour of the assessee and the assessee filed the appeal on 07/01/2013. It was contended that keeping in view, the substantial cause of justice, the delay may be condoned. 2.1. On the other hand, Shri M. Dayasagar, ld. CITDR, contended that delay may not be condoned for which reliance was placed upon the decision of the Tribunal in Vikas Bhalchandra (ITA No.3245/Mum/2012) order dated 20/08/2014 and Shri Vijay V. Meghani vs DCIT (ITA No.5418 & 5419/Mum/2011) order dated 20/08/2014. ld. CIT-DR brought to our notice to amendment made by the Finance Act, 2015 w.e.f. 01/06/2015. 2.2. We have considered the rival submissions and perused the material available on record. Under the facts narrated before us, considering the situation, no doubt filing of an appeal is a right granted under the statute to the assessee and is not an automatic privilege, therefore, the assessee is expected to be vigilant in adhering to th....
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....law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the others courts in the hierarchy." 2.4. Furthermore, the Hon'ble Supreme Court in the case of Vedabai Alia Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil 253 ITR 798 held that the court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression 'sufficient cause', the principle of advancing substantial justice is of prime importance. The court held that the expression "sufficient cause" should receive liberal construction. 2.5. So far as, the decisions cited by the ld. CIT-DR is concerned, we find that in the case of Shri Vikash Bhalchandra vs ACIT, there was delay of 2009 days and in the case of Shri Vijay Meghani, there was delay of 2984 days, whereas, in the appeal of the assessee, there is delay of 252 days, therefore, considering the huge delay in the cases relied upon by the ld. CIT-DR and....
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.... details filed by the assessee" meaning thereby, the facts were duly examined by the Assessing Officer. Likewise, in para-4, discussion has been made with respect to business development expenses and in para-5, further discussion has been made on disallowance of miscellaneous expenses and thereafter in para-6, the income was computed. In the concluding para, direction has been issued for giving credit for pre-paid taxes and charging of interest u/s 234A, 234B and 234C as applicable. We also note that vide letter dated 14/12/2009 addressed to the ACIT (pages 42 to 45 of the paper book) explanation with respect to ESOP and the details of expenses was furnished. It is not the case that the ld. Assessing Officer passed the order blindly. Possibly, the order may not be detailed one but that does not mean the assessment was framed without examining the facts, therefore, the assessment order cannot be said to be erroneous or prejudicial to the interest of the Revenue. 3.3. So far as, the scope of revision u/s 263 of the Act is concerned, the Hon'ble Bombay High Court has enlightened us in its order dated 15/04/1993 in CIT vs Gabrial India Ltd. (1993) 203 ITR 108 (pages 9 to 15 of the p....
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....y, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. (2) No order shall be made under sub-section (1) - (a) to revise an order of reassessment made under section 147, or (b) after the expiry of two years from the date of the order sought to be revised. . . . 9. From a reading of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is "erroneous in so far as it is prejudicial to the interests of the Revenue". It is not an arbitrary or unchartered power. It can be exercised only on fulfilment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which....
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....ut 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 examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax O....
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....h has been passed by the Income-tax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is not in accordance with the law in consequence whereof 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. Our aforesaid conclusion gets full support from a decisio....
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....oner only after coming to the conclusion that the earlier finding of the Income-tax Officer was erroneous and prejudicial to the interests of the Revenue. Without doing so, he does not get the power to set aside the assessment. In the instant case, the Commissioner did so and it is for that reason that the Tribunal did not approve his action and set aside his order. We do not find any infirmity in the above conclusion of the Tribunal. 16. In the light of the foregoing discussion, we answer the question referred to us in the affirmative, that is, in favour of the assessee and against the Revenue." 3.4. In the celebrated case of Malabar Industrial Company Ltd. vs CIT (243 ITR 83)(SC), it was held that for invoking jurisdiction u/s 263 by the ld. Commissioner, the order should be either erroneous and prejudicial to the interest of Revenue. In that case, the assessment was framed without making an enquiry by the Assessing Officer, in that situation, exercise of revisional jurisdiction by the CIT was held to be justified. However, in the present case, due enquiries was made by the Assessing Officer and the necessary details, filed by the assessee were examined, therefore, th....
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....IT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 210 CTR (SC) 30 (2007) 291 ITR 500 (SC) b. CIT vs. Mysore Spun Concrete Pipe (P) Ltd. (1991) 97 CTR (Kar) 117 (1992) 194 ITR 159 (Kar) c. CIT vs. Seshasayee Paper & Boards Ltd. (2000) 242 ITR 490 (Mad) d. Gee Vee Enterprises vs. Add!. CIT 1975 CTR (Del) 61 : (1975) 99 ITR 375 (Del) e. Madras Industrial Investment Corporation Ltd. vs. CIT (1997) 139 CTR (SC) 555 (1997) 225 ITR 802 (SC) f. Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC) 3.7. Now, we shall deal with the contention of the ld. CIT-DR with respect to amendment made by the Finance Act, 2015 w.e.f. 01/06/2015. The provision of the Act is reproduced hereunder for ready reference:- "263. (1) The [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 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 nece....
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....ch is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] (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 the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." If the aforesaid insertion of Explanation -2 is analyzed the revisional jurisdiction can be invoked only when (a) The order is passed without making enquiries or verification which ....
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....00] 243 ITR 83, the Supreme Court held that the provision "cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer" and "it is only when an order is erroneous that the section will be attracted". The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression "prejudicial to the interests of the Revenue", the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headnote) : "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 result....
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....ction 14A was correctly made, and let us not forget that the CIT(A) had all the powers, co terminus with the powers of the Assessing Officer, including the powers of enhancement. As to whether the learned Commissioner could have exercised his revision powers under section 263 at this point of time, we find guidance from Hon'ble Madras High Court's judgment, in the case of CWT Vs Sampathmal Chordia [(2002) 256 ITR 440 (Mad)], which observes, inter alia, as follows: 2. The revisional jurisdiction cannot be exercised in a manner which would result in depriving the appellate authority of the power to examine the correctness of the order under appeal, when an appeal, has, in fact, been filed in respect of those matters and was pending before the appellate authority. The Explanation to s. 25(2) in cl. (c) thereof, after its amendment by the Finance Act of 1989 makes this abundantly clear. That provision sets out that where the order sought to be revised is one passed by the AO and had been made the subject-matter of an appeal, the power of the CWT will extend to such matters as had not been considered and decided in such appeal. 8. The provisions of Explanation ....
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....st of the Revenue" u/s. 263 of the Act, has to be read in conjunction with the expression "erroneous" order by the Assessing Officer. Every loss of Revenue as a consequence of assessment order cannot be termed as prejudicial to the interest of Revenue, meaning thereby, "prejudice" must be prejudice to the Revenue administration. At the same time, if another view is possible revision is not permissible. Our view is fortified by the decision from Himachal Pradesh Financial Corpn. (186 Taxmann 105)(HP), Bismillah Trading Co. (248 ITR 292)(Ker.) and CIT vs. Green World Corpn. (314 ITR 81)(SC). For invoking revisional jurisdiction u/s. 263 the assessment order must contain grievous error which is subversive of the administration of Revenue. Further, exact error must be disclosed by the Commissioner as was held in CIT vs. G.K. Kabra (211 ITR 336)(AP). Totality of facts, clearly indicates that assessment u/s. 143(3) of the Act was framed by the Assessing Officer after obtaining necessary details from the assessee and further the same were examined by him. Therefore, even if, the same has not been spelt elaborately in the assessment order it cannot be said that there is a "lack of enquiry"....