TaxTMI 
TaxTMI 
2019 (3) TMI 81
X X X X Extracts X X X X
X X X X Extracts X X X X
....to be an investment company engaged in investment in shares and debentures of unlisted companies was assessed for impugned AY in scrutiny assessment u/s 143(3) on 24/12/2010 accepting returned loss of Rs. 552.34 Lacs reflected by the assessee in its return of income e-filed on 20/09/2008. The said loss comprised-off of Business Loss of Rs. 0.15 Lacs and Long-Term Capital Loss [LTCL] of Rs. 552.18 Lacs. 2.2 Subsequently, upon perusal of case records, the aforesaid order was subjected to revisional jurisdiction u/s 263 by Ld. CIT vide showcause notice dated 12/02/2013 wherein the stated order was held to be erroneous and prejudicial to the interest of the revenue on following grounds: - (i) During the year, it was noticed that the purchase cost of shares in respect of M/s Shipping Dot Com India Pvt. Ltd. is at Rs. 5,71,00,000/- and M/s Essar Spactel Pvt. Ltd. is at Rs. 22,97,48,750/-. However, in the balance sheet, the amount is reflected at Rs. 28,69,48,650/-. Thus, there is a difference of Rs,1,00,100/- in the purchase value of shares. Therefore, the AO has failed to examine this issue correctly. (ii) On perusal of the details of the sundry debtors submitted by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....us. 3.1 The Ld. Authorized Representative for Assessee [AR], Shri Vijay Mehta, drawing our attention to the financial statements as well as other documents as placed in the paper-book, vehemently contested the above stated observations made by Ld. CIT on which the assessment framed by Ld. AO was held to be erroneous and prejudicial to the interest of the revenue. It was submitted that revision was being invoked on erroneous assumption of facts. Reliance was placed on catena of judicial pronouncements, few of which could be tabulated in the following manner: - No. Case Laws Authority Citation 1. ACIT Vs. J.K.D'Costa Hon'ble Delhi High Court 133 ITR 7 SLP dismissed (147 ITR 1] 2. Smithkline Beecham Consumer Healthcare Ltd. Vs DCIT ITAT, Chandigarh 68 ITD 163 3. Century Plyboards (I) Ltd. Vs CIT ITAT, Kolkata ITA No. 643/Kol/2014 20/01/2016 4. Sterling Biotech Ltd. Vs CIT ITAT, Mumbai ITA 2750-56/Mum/2016 29/06/2016 5. Surya Alloy Industrie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the paper-book, it is observed that as on 31/03/2007 the value of shares of Shippingstop Dot com (I) P. Ltd. & Essar Spacetel P. Ltd. has been reflected as Rs. 5,71,00,000/- & Rs. 22,97,48,750/- respectively. The aggregate of the two comes to Rs. 28,68,48,750/- which matches with the correct amount as noted by Ld. CIT. The statement of long-term capital loss as per assessee's computation of income has been placed on page-24 of the paper book. The figures stated in this statement are in total agreement with computation of income, profit & loss account and purchase cost as reflected in the balance sheet. The figures as on 31/03/2008 are reflected as nil. Apparently, the figures of Rs. 28,69,48,650/- as noted by Ld. CIT has been picked up from cash flow statement as placed on page no. 10 of the paper book. However, the figures reflected in the cash flow statement also completely matches with the Balance Sheet of the assessee. Hence, we find the stated observation to be factually incorrect and therefore, there could not no occasion to consider the assessment order erroneous on this point. 4.4 The aforesaid conclusion is further fortified by the fact that during quantum assessment pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce Sheet or the assessment order since closing sundry debtors balances were tallying with amount reflected in the Balance Sheet. The account confirmation of the said debtors was also placed on record to fortify the said fact. However, Ld. CIT without considering the explanation / details submitted by the assessee simply set aside the matter. The same, in our opinion, is not line with settled legal position since it was obligatory on the part of Ld. CIT to deliberate upon the replies submitted by the assessee and weigh the same to arrive at a conclusion that whether the order under question, in terms of assessee's reply, could be termed as erroneous as well as prejudicial to the interest of the revenue or not. The co-ordinate bench of this Tribunal, in its decision titled as Metcapas Engineering & Mahendra Construction Co. (JV) Vs. CIT [86 Taxmann.com 128 11/09/2017], which has been authored by one of us, after considering catena of judicial pronouncements, has succinctly put forward the legal position, in this regard, in the following manner: - 4. We have given a thoughtful consideration to the order passed by the CIT and are unable to persuade ourselves to uphold the same....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he interest of the revenue. We are of the considered view that mere placing on record the reply/explanation of the assessee on the issues on which the order of the A.O is sought to be revised as a mere formality, would therein render the very affording of opportunity of being heard to the assessee as nothing better than being a farce and an eye wash, defeating the very legislative intent. We are afraid that in the case of the present assessee, though the CIT had placed on record the reply of the assessee in respect of the issues on which the order passed by the A.O was sought to be revised and had also referred about the same in the body of his order passed under Sec. 263, however, neither any reason had been given by the CIT, nor it can be gathered from the impugned order, as to why the explanation of the assessee that the order passed by the A.O was not erroneous and prejudicial to the interest of the revenue on the issues on which it was sought to be revised, was not found to be acceptable. We may clarify that though there is no doubt that the jurisdiction to revise the order passed by the A.O remains within the exclusive domain of the jurisdiction of the CIT, but however, the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e provisions of the section envisage that the CIT may call for the records and if he prima facie considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interest of the Revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. The twin requirements of the section are manifestly for a purpose. Merely because the CIT considers on examination of the record that the order has been erroneously passed so as to prejudice the interest of the Revenue will not suffice. The assessee must be called, his explanation sought for and examined by the CIT and thereafter if the CIT still feels that the order is erroneous and prejudicial to the interest of the Revenue, the CIT may pass revisional orders. If, on the other hand, the CIT is satisfied, after hearing the assessee, that the orders are not erroneous and prejudicial to the interest of the Revenue, he may choose not to exercise his power of revision. This is for the reason that if a query is raised during the course of scrutiny by the AO, which was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons for such a conclusion, it would certainly have been open to him to remand the matter to the ITO for such other investigation or enquiry as might be necessary." Similar proposition has been laid out in other case laws tabulated in para 3.1 at serial numbers 8 to 12 above. Upon due consideration of factual matrix, we find that the above discrepancy as observed by revisional authority stood explained by the assessee during assessment proceedings as well as during revisional proceedings which is further evident from the fact that sundry debtors balances as reflected in the Balance Sheet matches with the details filed by the assessee during assessment proceedings as supported by confirmation of accounts filed by the assessee in respect of concerned sundry debtor. Last but not the least, the alleged discrepancy, viewed from any angle, would have no bearing on assessee' income during impugned AY and therefore, there could be no occasion to term the assessment order as prejudicial to the interest of the revenue on this account. This being the case, the twin conditions as envisaged by Section 263 viz. the orders should be erroneous as well as prejudicial to the interest of the revenu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt in CIT v. Associated Industrial Development Co. (P.) Ltd. [1971] 82 ITR 586 (SC) has observed that: - "Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment." It is also undisputed fact that the investments sold by the assessee during impugned AY were long term investments made between AY 2004-05 to 2006-07 and the same were held as investment valued at cost in the Balance Sheet which lend credence to the arguments of Ld. AR, in this regard. 4.8 Proceeding further, we find that the aforesaid position has also been accepted by the revenue by way of acceptance of returned income for AYs 2006-07 as well as for AY 2009-10 in scrutiny assessment u/s 143(3), the copies of which have been placed on record. This is further fortified by undisputed fact that even during setaside proceedings consequent to impugned order....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4AB and therefore, the provisions of Section 44AB were not applicable to the assessee. This being the case, we do not find any error in the quantum assessment order which necessitate revisions by Ld. CIT. 5.1 Proceeding further, Ld. AR has also agitated the blanket set aside of assessment order and submitted that as per settled legal position, only those issues could be subjected to revisional jurisdiction u/s 263 which made the order erroneous and prejudicial to the interest of the revenue and cancellation of complete order would disturb the already concluded issues and result in serious detriment to the assessee which was not the intention of the legislature. It has been submitted that the cancellation of complete order would give another inning to Ld. AO to review the already concluded issues in the guise of revisional proceedings which was not permitted under the law. For this proposition, our attention has been drawn to the following judicial pronouncements: - No. Case Laws Authority Citation 1. ACIT Vs. J.K.D'Costa Hon'ble Delhi High Court 133 ITR 7 SLP dismissed (147 ITR 1] 2. Smithkline Beecham Consumer Healthcare Ltd....