TaxTMI 
TaxTMI 
2018 (10) TMI 1495
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in assuming jurisdiction u/s. 263 of the Act in order to impose his own views on the Ld. A.O. when the A.O. had taken a possible view. 2. That, there being no incriminating material discovered pursuant to search in this case and as per proviso 2 to sec.153A the assessment in this case was not pending, the Ld. Pr. CIT erred in alleging that the A.O. failed to carry out necessary enquiry and investigation, more so when the impugned assessment pertains to unabated assessment of the assessee. 3. That, the impugned order passed by the A.O. originally being neither erroneous nor prejudicial to the interest of the revenue, the Ld. Pr. CIT wrongly invoked jurisdiction by making allegation which is not supported by any contra evidence or by law. 4. That, the Ld. Pr. CIT erred on facts as also in law in having exercised revisionary power u/s.263 on the issues which were beyond the jurisdiction of A.O. while framing original assessment u/s.153A/143(3), as interpreted by various Courts and hence the order passed u/s. 263 is totally unjustified on facts as also in law and liable to be quashed. 5. That, even on merits of the case, the Ld. Pr. CIT erred in directing the A.O. to determine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unyat Sen Street, Kolkata- 700001. 5. Thereafter, the notice u/s.153A of the Income Tax Act,1961 was issued by the Department on 07.04.2015, asking the assessee to file correct return of its total income in respect of which the assessee was assessable for the assessment year 2009-10. In response to the notice u/s 153A, the assessee filed its return of income for the assessment year 2009-10 on 30.05.2015, declaring a total income to the tune of Rs. 36,23,652/-, as shown in the revised return of income filed by the assessee subsequent to original return of income. Assessment under section 153A/143(3) was completed on 31.03.2016 assessing the total income to the tune of Rs. 52,63,710/- 6. Subsequently, the Pr. CIT-Central-I, Kolkata exercised his jurisdiction u/s 263 of the Act. The ld. Pr. CIT, on examination of the assessment record, noted that assessee company had debited an amount of Rs. 83,14,966/- (Rs.83,76,394 - Rs. 61,428) on account of "Sundry Balance Written off" in the Profit & Loss account. This amount had been derived by the assessee company after netting off of "debit balance write off" to the tune of Rs. 83,76,394/- and "credit balance write off" of Rs. 61,428/-. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad not been clear, the AO had wrongly allowed deduction for the write off of Rs. 1,31,233/- without examining its nature. 8. The ld Pr.CIT also observed that an amount of Rs. 10 lakh being part of operating expenses was disallowed in the preceding assessment order u/s.143(3) dated 27/12/2011 but the same disallowance had not been made in the order passed u/s.153A read with section 143(3) dated 31/03/2016 despite starting the computation from the total income shown in revised original return i.e., Rs. 36,23,652/-. Therefore, the income assessed u/s.,153A read with section 143(3) dated 31/03/2016 is short by an amount of Rs. 10 lakh. 9. In view of the above findings, the ld Pr.CIT noted that the order passed u/s.153A/143(3) for A.Y.2009-10 dated 31.03.2.016 is erroneous as well as prejudicial to the interest of revenue and is required to be revised as per the provision of section 263. In order to correct the above error in the assessment order u/s 153A/143(3) dated 31.03.2016, a notice U/S 263 of the Act dated 13.03.2018 has been issued asking the assessee to explain as to why the above mentioned assessment order should not be revised as per the provision of section 263 of the Act.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... been furnished by the assessee during the proceedings under section 263 of the Act. It is not clear as to these 'sundry debtors' are on account of what type of balances and whether these balances were taken into account while computing the income of the assessee during the year or in earlier years or not. Therefore, on the basis of details of "sundry debtors balances write off" furnished before Pr.CIT, it was not possible to decide whether such 'sundry debtors written off', can be allowed as per the provision of section 36(1)(vii)(i) read with sub section (2) or not. In view of the above fact and circumstances of the case, the Pr CIT set aside the assessment order passed by the A.O u/s 153A/143(3) dated 31.03.2016 and restored it to the file of assessing officer to examine all the "debit balances write off' for which narrations are given as "loan and advances written off" as contained in a table given in para No 7 of this order. Out of the entire amount of Rs. 72,31,592/- identified by ld Pr.CIT as "debit balances" being in the nature of "loan and advances written off" and "fixed assets written off", the assessing officer had already disallowed the debt balances of to the tune of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment order passed by the assessing officer as erroneous and prejudicial to the interest of revenue and therefore order passed by the AO u/s 153 r.w.s. 143(3) of the Act, should be revised under section 263 of the Act and accordingly he directed the ld assessing officer to add the amount of Rs. 10 lakh in the fresh assessment order being passed by him as per the direction given by him. 13. Aggrieved by the order passed by the ld Pr. CIT under section 263 of the Act, the assessee is in appeal before this Tribunal. 14. Learned Senior Counsel, Shri S.K. Tulsiyan, begins by pointing out that the a search & seizure operation u/s 132(1) of the Act was conducted on IRC Group on 13.03.2014 and the assessee company is part of the IRC Group. It is to be noted here that on the date of search, no assessment proceeding was pending before the AO for the relevant A.Y. 2009-10. Pursuant to said search, a notice u/s 153A of the Act was issued on 07.04.2014, against which the assessee-company filed its return of income on 30.05.2015 declaring a total income of Rs. 36,23,652/-. The assessment was completed u/s 153A/143(3) of the Act on 31.03.2016 assessing the total income at Rs. 52,63,710/- by ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....43(3) of the Act, dated 31.03.2016, is not erroneous and prejudicial to the interests of the revenue. It was submitted by the assessee company, during the proceedings under section 263 of the Act that the same may be rectified by the AO in section 154 of the Act as it is an error apparent from the facts of the record and revision of the order passed u/s 153A/143(3) of the Act as per section 263 should not be resorted for rectifying the above apparent mistake. 15. Before us, Learned Senior Counsel, Shri S.K. Tulsiyan, as regards the first and second grounds (vide para 14 of this order) raised by the ld Pr.CIT treating the assessment order passed by the A.O u/s 153A/143(3) of the Income Tax Act, 1961, as erroneous or prejudicial to the interest of revenue, submitted that the order passed by the A.O u/s 153(A)/143(3) of the Income Tax Act, 1961 in assessee`s case under consideration, should have been restricted to incriminating documents or details unearthed during search conducted in assessee`s case. Since, assessee`s original assessment order was completed u/s143(3) of the Income Tax Act, 1961 on 27.12.2011, much prior to search and seizure action on 13.03.2014. The ld Counsel poin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the ld Pr.CIT treating the assessment order passed by the A.O u/s 153A/143(3) of the Income Tax Act, 1961, as erroneous or prejudicial to the interest of revenue, submitted that out of the entire amount of Rs. 72,31,592/- as "debit balances" being in the nature of "loan and advances written off" and "fixed assets written off", the A.O has already disallowed the debt balances of Rs. 13,68,447/- as being fixed assets written off. Therefore, the A.O should examine the nature of balance amount of Rs. 58,63,145/- (Rs. 72,31,592- Rs. 13,68,447) as written off during the year under consideration. For other two balances of Rs. 1,27,033/- and Rs. 4,200/-, nature of 'sundry balances written off', are not specified, the details of these 'sundry balances written off', therefore, should also be examined. The A.O should determine whether these balances written off are in the nature of balances used in computation of income of the assessee in earlier years or they have arisen out of loan and advances given by the assessee. The assessing officer, while making the original assessment under section 143(3) dated 27.12.2011, had not examined the aspect that whether these balances used in computation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inal assessment passed under section 143(3) of the Act. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. We derive support for the proposition as stated above from the decision of the Hon'ble Delhi High Court in the case of Gee Vee Enterprises 99 ITR 375 (Del). We note that in the assessee`s case under consideration the present appeal pertains to assessee`s objection against the order dated 26.03.2018 passed by the Ld. Principal CIT, Central-1, Kolkata, u/s 263 of the Act holding t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n. First of all, it is worthwhile to go through the provisions of section 263 of the Income Tax Act, 1961 which reads as follows: "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 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, the assessment or cancelling the assessment and directing a fresh assessment" A bare reading of the foregoing provision makes it clear that the power of suo moto revision can be exercised by the Principal Commissioner only if, on examination of records of any proceedings under the Income Tax Act, 1961, he holds the opinion that any order passed by the Assessing Officer is 'erroneous in so far as it is prejudicial to the interests of the revenue'. Thus, as per the provision of section 263, the Pr. CIT has to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue "unless the view taken by the Assessing Officer is unsustainable in law". 23. Taking note of the aforesaid dictum of law laid down by the Hon'ble Apex Court, in the case of Malabar Industries (supra), let us examine whether the order passed by the Assessing Officer u/s 153A/143(3) dated 31.03.2016, in the assessee`s case under consideration, is erroneous as well as prejudicial to the interest of the revenue. It is an admitted fact that in the assessee`s case under consideration the original assessment u/s 143 (3) was completed on 27.12.2011 and search and seizure action was conducted on 13.03.2014. Therefore, undisputedly, the assessment year under question i.e. Assessment Year 2009-10 which was not pending before the Assessing Officer on the date of search on 13.03.2014 , therefore, the assessment which is not pending before the Assessing Officer is an unabated proceeding and the Assessing Officer is empowered to make....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ke the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record the AO. vii.Completed assessment can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 24. The Hon'ble Jurisdictional Calcutta High Court in Veerprabhu Marketing Ltd though in the context of section 153 of the Act has held as under: "We agree with the view expressed by the Delhi High Court that incriminating material is pre-requisite before power could have been exercise u/s 153(C) R.W. Section 153(A). In the case before us, the AO has made a disallowance of the expenditure, which was held disclosed, for one reason or the order, but such disallowances made by the AO were upheld by the L.D.CIT (A) but the Ld. Tribunal deleted these disallowance. We find no infirmity in the aforesaid Act of the Ld....
X X X X Extracts X X X X
X X X X Extracts X X X X
....find any incrementing material or new documents about the impugned amount of Rs. 10 lakh, as this amount was already on record of the assessing officer during original assessment U/s 143 (3) of the Act, dated 27.12.2011. Therefore, without incrementing material, no addition could have been made by the Assessing Officer in the light of the order of the Hon'ble High Court in the case of Kabul Chawla (supra) and the Assessing Officer could have only reiterated the regular assessment made u/s 143(3) of the Act. In case, if Assessing Officer made any mistake while reiterating the assessment as per section 143(3) of the Act, then it can be rectified by the Assessing Officer himself u/s 154 and cannot give rise to revisional jurisdictional to ld. Pr. CIT u/s 263 of the Act. 26. We are aware of the fact that the Assessing Officer's role while framing an assessment is not only an adjudicator. The AO has a dual role to dispense with i.e. he is an investigator as well as an adjudicator; therefore, if he fails in any one of the role as afore-stated, his order will be termed as erroneous. We note that in this case since there was no incriminating material unearthed during the search, the Asse....