2019 (7) TMI 661

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.... Commissioner of Income Tax was not justified in holding that the order passed is erroneous and prejudicial to the interest of the revenue. 3. That on the facts and in the circumstances of the case of the assessee, the Ld. Principal Commissioner of Income Tax was not justified in holding that the claim of the assessee that the he has invested the sale proceeds in a residential house is not verifiable. 4. That the assessee craves leave to add, amend, modify or alter any ground of appeal on or before the hearing. 2. Briefly stated facts are that a search & seizure action u/s 132 of the Income Tax Act, 1961 (hereinafter called as 'the Act') was carried out at the premises of the assessee on 29.1.2014. Subsequently, proceedings u/s 153A of the Act was initiated and assessment u/s 153A r.w.s. 143(3) of the Act was passed on 14.3.2016, thereby assessing a total income of Rs. 16,88,730/-. The Ld. Principal CIT observed that on verification of the record, it was revealed that assessee had sold plot No.18A, Gulmohar Colony, Chunna Bhatti during the financial year 2009-10 relevant to the assessment year 2010-11 for a sum of Rs. 26,01,000/-. The fair market value of property on date of ....

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.... case of CIT Vs. Alagendran Finance Ltd. (2007) 9 ITJ 613 (SC). 4. Per contra, Ld. CIT(DR) opposed these submissions and submitted that the submission of the assessee are misconceived. Ld. CIT(DR) submitted that admittedly in this case, no assessment u/s 143(3) of the Act was framed. Ld. CIT(DR) submitted that the ratio of the Hon'ble Supreme Court rendered in the case of CIT Vs. Alagendra Finance Ltd. (supra) as relied by the Ld. Counsel for the assessee is not applicable on the facts of the present case as the facts in the present case are clearly distinguishable. Ld. CIT(DR) submitted that in the present case there was no assessment u/s 143(3) of the Act. Th A.O. has not made the requisite enquiry and applied his mind for allowability of such deduction. Further, Ld. CIT(DR) submitted that the judgement relied by the Ld. Counsel for the assessee the facts were that case was reopened u/s 147 of the Act and it was not the case where the assessment was framed u/s 153A of the Act. Ld. D.R. submitted that both the provisions operate in different fields. Ld. D.R. relied on the finding of the Ld. Pr. CIT. 5. We have heard the rival submissions, perused the materials available on ....

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....the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The contention of the assessee are two fold, firstly the claim was made in original return which was processed and therefore, it cannot be inferred that the claim was made first time during the proceedings u/153A of the Act and secondly, there was no incriminating material suggesting that the deduction so claimed was not allowable to the assessee. It is contended that in the present case, assessment has already been completed and it was not an abated assessment. We have considered the rival submissions. There is no dispute that as per section 263 of the Act, the Principal Commissioner of Income Tax is empowered to call for and examine the record of any proceedings under the Act and if he considers that any order passed therein by the A.O. is erroneous in so far as it is prejudicial to the interest of the revenue. Hence, there is no prohibition under the law that the Ld. Principal CIT cannot revise the order passed u/s 153A of the Act. However, exercising of the jurisdiction is subject to satisfaction of twin conditions i.e. the order so passed is erroneous in so f....

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....jee Dadabhoy & Co. Vs. S.P. Jain and Another [31 ITR 872], the High Court of Karnataka in Commissioner of Incometax, Mysore Vs. T. Narayana Pai [98 ITR 422], the High Court of Bombay in Commissioner of Income-tax Vs. Gabriel India Ltd. [203 ITR 108] and the High Court of Gujarat in Commissioner of Income-tax Vs. Smt. Minalben S. Parikh [215 ITR 81] treated loss of tax as prejudicial to the interests of the revenue. Mr. Abaraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company Vs. Commissioner of Income-tax [163 ITR 129] interpreting prejudicial to the interests of the revenue. The High Court held, In this context, it must be regarded as involving a conception of acts or 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....