TaxTMI 
TaxTMI 
2017 (8) TMI 1432
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..../s 263/143(3), even when the appeal u/s 260A against ITAT's order dated 25.02.2010 in ITA No.589/JP2009 is pending before the Hon'ble High Court? Whether the assessment order dated 27.07.2009 passed in compliance to order dated 16.2.2009 u/s 263 of the Act by the Commissioner can be treated as nullity and without locus standi inspite of the fact that the same was passed prior to passing of ITAT order dated 26.2.2010 and the fact of passing 27.7.2009 order was not at all considered by the ITAT?" D.B. Income Tax Appeal No.243/2011 admitted on 23.05.2013 "Whether the order of revision u/s 263 of Income Tax Act, 1961 can be declared as without jurisdiction, wrong and bad in law, when the basis of issuing the same are the evidences recovered during the course of survey u/s 133A and statements recorded u/s 131 of the Act, which categorically show that the order was erroneous and prejudicial to interest of revenue? Whether deduction of income u/s 80IB of the Act can be granted to the assessee when the new business as created by reconstruction splitting of business already in existence on the basis of evidences recorded during survey provisions Section 133A of the Act? D.B. Income Ta....
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....05. As is evident from the sequence of events, the same business, at the same place and with same machinery had been going on for several years, in the name of M/s Indian Art Palace." 4. The finding arrived at by the CIT(A) is as under:- "3.1 On perusal of the records, I find that the identical issues, as involved in this ground of appeal, were also involved in the appellant's appeal for the A.Y.2003-04. The said appeal has been decided by me vide my order of even date, in ITA No.147/JPR/09-10, wherein as per detailed discussion in para 3.3 of that order, I have partly allowed the appellant's ground taken against this disallowances of the claimed deduction u/s 80-IB of the I.T. Act. Therefore, following may said order, this ground of appeal is;, similarly allowed in this year also. Accordingly, a disallowance of 5% amounting to Rs. 3,49,045/-, out of the claimed deduction u/s 80-IB is confimed and the balance disallowance is directed to be deleted. Consequently, this ground of appeal is treated as partly allowed." 5. While considering the matter, the tribunal has observed as under:- 9. We have heard rival submissions and considered them carefully. After considering the submis....
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....e manufacturing activities for affecting sales worth Rs. 14,73,58,247/- with the help of a small plant of Rs. 2 lacs as shown by the assessee in his balance sheet. (ii) That as per details of purchases the assessee had made purchases of ready built furniture of Rs. 16164420/- on Form H relates to purchases from out of state Rs. 7,03,050/- and on Form B-17, purchases within state worth Rs. 1,54,61,370/-. Thereafter, the AO passed a speaking order by which deduction claimed under section 80IB was allowed on 90% sales made by assessee. After examining all these evidences and documents and taking into consideration the order of AO as well as order of ld. CIT passed under section 263, the following findings were given by the Tribunal which are recorded at pages 15 & 16 of its order :- " Before us the ld. A/R has reiterated those explanation furnished by the assessee before the AO as discussed above. The ld. A/R has successfully been able to demonstrate before us that M/s Art Palace, a proprietary concern of the assessee was not set up in same business premises as that of M/s Indian Art Palace, the assessee was never a partner or employee in the firm and had no connection with th....
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.... successfully been able to demonstrate before us that M/s Art Palace, proprietary concern of the assessee was not set up at the same business premises as that of M/s Indian Art Palace, the assessee was never a partner or employee in the firm and had not connection with the said firm M/s Indian Art Palace. The concern M/s Art Palace is sole proprietary concern of the assessee. The assessee on this new premises set up his unit w.e.f. 28.2.2002 which place is having separate approach. The unit of M/s Indian Art Palace was working at different location since 1984 as shown in the map place at page 11 supported by an affidavit placed at page 12 of the paper book, the Indian Art Palace carried on business of manufacturing and sale till financial year 2002-03 i.e. even after assessee set up its unit and commenced business, moreover manufacturing work of the unit of assessee was got done on job basis, statements recorded in course survey in financial year 2008-09 from employees of factory cannot be relied upon as recorded behind the back of the assessee. It has been further observed by the Tribunal that assessee has also purchased machinery in financial year 2002-03 and 04- 05. These observ....
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....e assessee for AY 2005-06 vide this office letter No.CIT.III/JPR/ITO(T&J)/2008- 09/2445 dated 14.01.2009. The assessee was asked to explain as to why the order passed for AY 2005-06 on 29.11.06 may not be revised and the deduction u/s 80IB of the IT Act allowed in excess to the extent of Rs. 1,35,17,406 may not be ordered to be withdrawn. The hearing in this matter was fixed on 30th January, 2009. This condition is not fulfilled because the business of assessee is only an extension of a very old existing business in the name of M/s Indian Art Palace. M/s Indian Art Palace was an old partnership firm in which family members of assessee were partners. In nutshell, the same business continued in the name of M/s The Art Palace, as proprietary concern of the assessee. The features characteristic of the continuance of the old business is that: i. The business was started in the same business premises and is still continuing, primarily in the same premises. ii. The business was started with the same machinery and is still using the old machinery of the old concern M/s Indian Art Palace, with routine addition to the old machinery every year. iii. Many of the workers and employees....
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....betel nuts we find from a perusal of the record that the price of betel nuts ranged from Rs. 25/- to Rs. 192/- per kg.. The Commission has taken an average of Rs. 82/- per kg., in which we do not find any error. Further, no evidence has been filed by the petitioner to indicate that he had purchased the betel nuts at the rate of Rs. 45/- per kg.. This being a pure finding of fact, no interference can be made by this Court in a writ jurisdiction." 12. He has relied upon the decision rendered by the Bombay High Court in the case of Dr. Dinesh Jain Vs. Income Tax Officer reported in (2014) 363 ITR 210(Bom) wherein it has held as under:- 5. To consider the first contention, it will be apt to quote section 263(1) which is relevant for our purpose : "263. Revision of orders prejudicial to revenue - (1) The 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 insofar 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 ....
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....r orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income Tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration". In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the revenue. If due to an erroneous order of the Income Tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 13. Counsel for the appellant has referred to Section 263 (1)(b) which reads as under:- 263 (1) (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 Commissioner; 14. Counsel for the respondent has relied upon the decision rendered by the Supreme Court in the case of Commissioner of Income Tax Vs. Max India Ltd. Reported in (2000) 213 CTR 0266 wherein it has been ....
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....ot erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1) of the Act. 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 attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. 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 conferred to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy & Co. v. S.P. Jain & Anr. MANU/WB/0263/1956 : [1957] 31 ITR 872 (Cal) , the High Court of Karnataka in CIT v. T. Narayana Pai MANU/KA/0017/1974 : [1975] 98 ITR 422 (KAR) , the High Court of Bombay in CIT v. Gabriel India Ltd. MANU/MH/0220/1993 : [1993] 203 ITR 108 (Bom) and the High Court of Gujarat in CIT v. Smt. Minalben S. Parikh MANU/GJ/0177/1994 : [1995]....
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....ITR 0157 which was confirmed by the Supreme Court (2013) 352 ITR 480 (SC). Para 4 and 5.3 reads as under:- "4. In the instant case, there was a survey operation conducted under Section 133A of the Act in the assessee's premises and a statement was recorded from one of the partner. Assuming there were discrepancies and irregularities in the books of accounts maintained by the assessee, an offer of additional income for the respective assessment years was made by the partner of the firm. But, such statement, in view of the scope and ambit of the materials collected during the course of survey action under Section 133A shall not have any evidentiary value, as rightly held by the Commissioner and the Tribunal, since such statement was not attached to the provisions of Section 133A of the Act. It could not be said solely on the basis of the statement given by one of the partner of the assessee-firm that the disclosed income was assessable as lawful income of the assessee. Since there was no material on record to prove the existence of such disclosed income or earning of such income in the hands of the assessee, it could not be said that the Revenue had lost lawful tax payable by t....