TaxTMI 
TaxTMI 
2019 (8) TMI 1418
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....in interpreting the provisions of Section 263 which says "Commissioner may call for and examine the records of the proceedings if he considers any order passed therein, by the A.O. is erroneous in so far as prejudicial to the interest of revenue" hence the view of the ITAT in the present case that A.O. had already conducted inquiry is unsustainable. (3) Whether the ITAT erred in law in curbing the power of the CIT granted by the legislature to examine and correct the orders of the A.O. especially when this is the only remedy available with the department to correct the wrong of the A.O. (4) Whether the ITAT erred in law in deleting the order U/s 263 on the issue of development expenses when it was clear that only a small portion of such development expenses was actually related to land development receipts. (5) Whether the ITAT erred in law in deleting the order U/s 263 on the issue of agricultural income when it was clear that assessee had only purchased a land on which crops were shown and sale proceeds of such crops does not constitute agriculture income. (6) Whether the ITAT erred in law in allowing the appeal of the assessee ignoring the fac....
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....er passed by the CIT, Meerut under Section 263 of the Act. 7. Sri Subham Agarwal defending the order passed by the Commissioner of Income Tax, Meerut under Section 263 of the Act submitted that the assessing officer has disallowed the expenses of Rs. 1,20,000/- only, without any inquiry and has accepted the restb of the amount as land development expenses in the profit and loss account, as such, the CIT had rightly remanded the matter to the assessing authority exercising revisional power as the order of A.O. was erroneous and pre-judicial to the interest of revenue. He further submitted that after the remand order, A.O. again has passed assessment order on 7.3.2014 and now the addition of Rs. 7,16,62,142/- on account of land development expenses had been made as the assessee did not avail the opportunity despite repeated reminders and failed to produce the books of account and comply the order of the assessing authority. He contended that Tribunal has passed the order impugned after assessment order has been passed by the assessing authority after remand, and Tribunal should not have set aside the same, but should have relegated the matter to assessing authority directing th....
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....he order, in view of Clause (c) of Explanation-1 to Section 263 of the Act, which provides that when appeal is pending before the Commissioner, the exercise of jurisdiction under Section 263 of the Act is barred. He relied upon the judgment in the case of Smt. Renuka Philip vs. ITO (2018)409 ITR 567 (Mad), the relevant paragraphs of which are extracted hereunder: "21. With regard to the merits of the case, the learned counsel for the assessee referred to a decision of the Division Bench of this Court in Dr.P.K.Vasanthi Rangarajan v. CIT [2012] 23 taxmann.com 299/209 Taxman 628 (Mad.), wherein, the Hon'ble Division Bench held that there is no inhibition in the assessee claiming the benefit of investment made in four flats thereby gaining the benefit under Section 54F of the Act. The Court took note of the decision in TCA No. 656 of 2005 dated 04.01.2012. However, we are not examining the merits of the matter at this juncture since, we are only called upon to answer the Substantial Question of Law with regard to the assumption of jurisdiction of the Commissioner under Section 263 of the Act. The power under Section 263 of the Act is not exercisable under certain circumst....
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....apply his mind or that he has not made inquiry on the subject and this would not justify interference by Commissioner by issuing notice under Section 263 of the Act. 10. In Vikash Polymers (supra) relevant part of the observations in this regard read as under (page 548 of 341 ITR): "This is for the reason that if a query was raised during the course of scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer was reflected in the assessment order, that would not, by itself, lead to the conclusion that the order of the Assessing Officer called for interference and revision." 11. Further, the relevant observation made in Vodafone Essar South Ltd. (supra) in this regard reads as under (page 531 of 1 ITR-OL): "The lack of any discussion on this cannot lead to the assumption that the Assessing Officer did not apply his mind." 12. Learned counsel for the Department could not place any other authority before this Court wherein any otherwise view has been taken. On the contrary, learned counsel for assessee has placed before us a decision of Bombay High Court in Incom....
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....t in the case of Goyal Private Family Specific Trust [1988] 171 ITR 698, we are of the considered opinion that merely because the Income- tax Officer had not written lengthy order it would not establish that the assessment order passed under Section 143(3)/148 of the Act is erroneous and prejudicial to the interests of the Revenue without bringing on record specific instances, which in the present case, the Commissioner of Income Tax has failed to do." 13. Lastly, the counsel for the assessee submitted that the argument of counsel for the Department relying upon fresh assessment order made by the assessing officer under Section 263/143(3) of the Act dated 7.3.2004 for the purpose of Section 263 of the Act is not sustainable, as according to him definition of expression "record" as per Clause (b) of Explanation to Section 263 of the Act includes all the records relating to Section 263 proceedings available at the time of examination by the CIT only, and not in subsequent order or fresh order passed thereafter under Section 263/143(3) of the Act, which could justify the proceedings under Section 263 carried out by the CIT. 14. We heard Sri Shubham Agarwal, learned counsel for t....
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.... for the exercise of jurisdiction by the Commissioner suo moto under it, is that the order of the Income-tax Officer is erroneous insofar as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i). the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the Revenue - recourse cannot be had to Section 263(1) of the Act. 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." 19. Similar view has been taken by the Bombay High Court in the case of Commissioner of Income Tax vs. Development Credit Bank Ltd., 323 ITR 83(SC), relevant paragraph of the same is extracted below: "Held, dismissing the appeal, that there was no basis or justification for the Commissioner to invoke the provisions of Section 263. The Assessing Officer after making an....
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....Officer could not be held to be "erroneous" simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That was not permissible. The Tribunal was justified in setting aside the order passed by the Commissioner of Income-tax under Section 263." 22. The Division Bench of this Court in the case of J.P.Srivastava & Sons vs. CIT, 111 ITR 326 (Alld) had taken a similar view. The relevant paragraph is extracted hereunder: "We are of opinion that the approach of the Commissioner is erroneous. The failure of the Income-tax Officer to deal with the claim of the assessee in the assessment order may be an error, but an erroneous order by itself is not enough to give jurisdiction to the Commissioner to revise it under Section 33B. It must further be shown that the order was prejudicial to the i....