TaxTMI 
TaxTMI 
2018 (8) TMI 747
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....ent framed U/s 147/143(3) dated 24.06.2016 and therefore, order of AO cannot be held to be erroneous and prejudicial to the interest of Revenue. 2. The assessee craves to amend, alter and modify any of the grounds of appeal. 3. the appropriate cost be awarded to the assessee." 2. The assessee filed its return of income for the assessment year under consideration electronically on 28.09.2009, declaring total income of Rs. 3,53,79,360/-. The Scrutiny assessment U/s 143(3) was completed on 13.12.2011 at income of Rs. 3,56,72,421/-. Subsequently the assessment was reopened based on the report of the Investigation Wing, Mumbai that the assessee has taken accommodation entries in respect of purchases from the entities managed by Shri Praveen Kumar Jain. The AO issued notice U/s 148 of the Act on 17.03.2015 and thereafter completed reassessment U/s 143(3) r.w.s. 148 of the Act whereby the purchases from two parties namely M/s Mohit International & M/s Nakashatra Business Pvt. Ltd. total amounting to Rs. 41,55,399/- were disallowed by the AO @ 25% of the said purchases. Hence, the AO made trading addition of Rs. 10,38,850/- being 25% of the unverifiable purchases made ....
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....ing notice U/s 148 on 17.03.2015 to assess the income on account of bogus purchases made by the assessee from two parties namely M/s Mohit International & M/s Nakashatra Business Pvt. Ltd. ( Hema Trading Co. Pvt. Ltd.). Thus the AO proposed to reassess the income on account of purchases of Rs. 41,55,399/- made by the assessee from these two above said parties due to the reasons that in the search and survey action carried out by investigation Wing, Mumbai and Surat it was found that these concerns are controlled and managed by one Shri Praveen Kumar Jain who is engaged in providing accommodation entry of bogus sales. Thus, when the very reopening of the assessment was to assess the bogus purchases and the AO has finally completed the reassessment by making disallowance @ 25% of such purchases then it is a clear case of a view taken by the Assessing Officer on this issue which was challenged by the assessee in the appeal filed before the ld. CIT(A). On our direction the Assessing Officer has appeared in the proceedings and has confirmed that on the date of show cause notice dated 29.03.2018 the appeal filed by the assessee was pending before the ld. CIT(A) wherein one of the ground ....
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....only to the matter which has not been considered and decided in the appeal. For ready reference we quote explanation-1 to section 263(1) as under:- " Section 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 necessary, 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. [Explanation.-1 For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed [on or before or after the 1st day of June, 1 988] by the Assessing Officer 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 ....
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....eated as prejudicial to the interest of the revenue. For example, when the 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 interest of the revenue, unless the view taken by the Income Tax Officer is unsustainable in law." (Emphasis Supplied) 9. A Division Bench of this Court has followed the principle laid down in the case of Malabar Industrial (supra) and followed this principle in the case of Commissioner of Income Tax vs. Shalimar Housing and Finance Ltd. (2010) 320 ITR 157 (M.P.) and the tribunal after taking note of all these factors has found that exercise of power under Section 263 was not warranted in the present case and, therefore, the CIT's revision order was quashed, we find no error in the same warranting reconsideration as we are also of the considered view that the exercise of power by the Commissioner under Section 263 was not proper. 10. In this case, if we go through a detailed order passed by the Com....
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...., we answer question No.1 and 3 by holding that the exercise of power under Section 263 by the appellate authority namely the Commissioner Appeal while passing the appellate order on 31.12.2012 was not proper and by interfering in a proceeding under Section 263 an error has been committed and if the tribunal has interfered on same, no illegality is committed by the tribunal. Once we hold that the exercise of power under Section 263 by the commissioner while passing order on 31.12.2012 was not warranted we have to dismiss this appeal and the other questions, i.e. question No.2 formulated need not to be gone into. 12. We accordingly hold that the power exercised by the Commissioner under Section 263 of the Income Tax Act being unsustainable, the appeal is liable to be and is accordingly dismissed." The Hon'ble Supreme Court in case of CIT vs. Arbuda Mills Ltd. 231 ITR 50 has also examined the Explanation-1(c) to section 263 and held in para 2 to 8 as under:- "2. The assessee is a company. The relevant assessment year is 1975-76 ending on 31st Dec., 1974. The assessment was completed under s. 143(3) r/w s. 144B, on 31st March, 1978, in which the net business loss ....