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2019 (9) TMI 206
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.... issued showcause notice u/s 263 of the Act, dt. 22/02/2019, proposing to revise the order of assessment passed u/s 143(3) of the Act on 06/12/2016. The assessee gave a detailed reply vide letter dt. 08/03/2019. She has filed a number of enclosures along with this reply. The ld. Pr. CIT, passed an order u/s 263 of the Act on 28/03/2019, revising the assessment order passed u/s 143(3) of the Act on 06/12/2016, by holding that the said assessment order is erroneous, insofar as, it is prejudicial to the interest of the revenue. He set aside the assessment order only to the extent of the observations made in this order u/s 263 of the Act and directed the Assessing Officer to pass a fresh assessment order by taking into account the facts and legal position as discussed by the ld. Pr. CIT-8, Kolkata, in the impugned order passed u/s 263 of the Act. 3. Aggrieved the assessee is in appeal before us. 4. The ld. Counsel for the assessee, Shri Siddhartha Jhajharia, submitted that the order passed u/s 263 of the Act is bad in law for the reason that a) The ld. Pr. CIT held that this is a suspicious sale transaction and while doing so, he did not rely on any evidence whatsoever t....
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....Assessing Officer which caused prejudice to the interest of the revenue. g) That the ld. Pr. CIT had made a factual mistake in holding that the assessee claimed capital loss on the purchase and sale of the said shares of M/s. Goodwill Griha Nirman Pvt. Ltd., despite the assessee verifying the same. He relied on a number of case-law in support of his contentions, which we would be referring to, as an when necessary. 5. The ld. CIT D/R, Dr. P.K. Srihari, on the other hand, supported the order of the ld. Pr. CIT and submitted that a perusal of the assessment order demonstrates non application of mind by the Assessing Officer. He argues that it is mandatory on the part of the Assessing Officer to record reasons as to why a particular view has been taken on the facts of this case. He submits that Explanation 2(a) to Section 263 of the Act, comes into play. He relied on notice issued by the ld. Pr. CIT u/s 263 of the Act and the order passed u/s 263 of the Act and case-law referred to in the order by the ld. Pr. CIT and submitted that the order of the ld. Pr. CIT is required to be upheld. 6. We have heard rival contentions. On careful consideration of the facts and circ....
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....d before us from pages 166 to 188 of the paper book. A perusal of the same demonstrates that the Assessing Officer has asked for and obtained all the necessary details. Under these circumstances, the presumption is that the Assessing Officer has examined the transactions in question. Non discussion or brief discussion of the issue by the Assessing Officer in the assessment order, under these facts and circumstances of the case, does not lead us to a conclusion that there is non application of mind to the issue on hand, specifically when voluminous details were obtained by the Assessing Officer after raising specific queries on the issue. 7.1.2. The Hon'ble Jurisdictional High Court in the case of Principal Commissioner of Income-tax-5, Kol. v. Ivory Consultants (P.) Ltd. [2018] 96 taxmann.com 539 (Calcutta) held as follows:- "Section 43(5), read with sections 73 and 263, of the Income-tax Act, 1961 - Speculative transactions (Derivatives) - Assessment year 2011-12 - In course of assessment, Assessing Officer made sufficient inquiries on derivative loss claimed as a business loss by assessee - After said inquiries Assessing Officer completed assessment holding that loss ....
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....s required to examine the return filed by the assessee in order to ascertain his income and to levy appropriate tax on that basis. When the Assessing Officer was satisfied that the return, filed by the assessee, was in accordance with law, he was under no obligation to justify as to why was he satisfied. On the top of that the Assessing Officer by his order dated 28th March, 2008 did not adversely affect any right of the assessee nor was any civil right of the assessee prejudiced. He was as such under no obligation in law to give reasons. The fact, that all requisite papers were summoned and thereafter the matter was heard from time to time coupled with the fact that the view taken by him is not shown by the revenue to be erroneous and was also considered both by the Tribunal as also by us to be a possible view, strengthens the presumption under Clause (e) of Section 114 of the Evidence Act. A prima facie evidence, on the basis of the aforesaid presumption, is thus converted into a conclusive proof of the fact that the order was passed by the assessing officer after due application of mind. Meerut Roller Flour Mills Pvt. Ltd. vs. C.I.T., ITA No. 116 /Coch/ 2012; CIT vs. Infosys Tec....
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....ed by the Assessing Officer. It is for this reason, section 263 is enacted to empower the Commissioner with the authority of revising the order of Assessing Officer, where the order is erroneous and the error has resulted in prejudice to the interests of the revenue. As is clear from the language of section 263, there has to be a proper application of mind by the Commissioner to come to a firm conclusion that the order of the Assessing Officer is erroneous and prejudicial to the interests of the revenue. Thus, two conditions need to be satisfied for invoking such a power by the Commissioner, which are: i) the order sought to be revised by the Assessing Officer is erroneous; and ii) it is prejudicial to the interest of the revenue [Para 7] It is clear from the above that where two view are possible and the Assessing Officer has taken one view and the Commissioner again revised the said order on the ground that he does not agree with the view taken by the Assessing Officer, in such circumstances the assessment order cannot be treated as an order erroneous or prejudicial to the interest of the revenue. Reason is simple. While exercising the revisionary juris....
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....the ld. Pr. CIT to come to such a conclusion. 8. The assessee had clarified before the Assessing Officer as well as the ld. Pr. CIT that the shares in question of M/s. Goodwill Griha Nirman Pvt. Ltd., were originally held by Late Shri Rakesh Salarpuria, who passed away on 07/04/2012 and that the impugned shares were transmitted to the assessee through "will" which was probated and hence, the question of producing purchase bills does not arise and that the cost of acquisition to Late Shri Rakesh Salarpuria, was the cost of acquisition to the assessee. It was further submitted that this transfer of shares were at a price as valued by a chartered accountant and under those circumstances, the allegation that this is a suspicious sale transaction is baseless. It was further submitted that the value of the shares was based on the intrinsic value of assets held by the company and hence the sale value was justified. This explanation supported by evidence proves the case of the assessee. These replies, in our view, were not properly considered by the ld. Pr. CIT. The allegations that the sale of shares transactions was suspicion is not supported by facts. No revision can take place ba....
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....nadequate inquiry". If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open. In Gabriel India Ltd.'s case (supra), law on this aspect was discussed in the following manner : ". . . From a reading of sub-section (1) of section, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examina-tion of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is 'erroneous insofar as it is prejudicial to the interests of the revenue'. It is not an arbitrary or unchartered power. It can be exercised only on fulfilment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous insofar as it is prejudicial to the interests of the revenue must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can b....
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....r that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. ****** We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation on that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be "erroneous" simply because in his order he did not make an elaborate discussion in that regard." 9.1. The Hon'ble Delhi High Court in the case of DIT vs. Jyoti Foundation (supra) , it has been held as follows:- "The order under Section 263 itself records that the Director felt that the inquiries were not sufficient and further inquiries or details should have been called. However, in such cases, as observed in the case of ITO v. D.G. Housing Projects Ltd. [2012] 343 ITR 32....
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.... law laid down in these case-law, to the fact of this case, we have to necessarily hold that the exercise of power by the ld. Pr. CIT u/s 263 of the Act, was bad in law. 10. We also find that in her reply, the assessee has stated before the ld. Pr. CIT that the assessee has earned capital gain on the sale of shares of M/s. Goodwill Griha Nirmal Pvt. Ltd., and that she has not incurred any loss as alleged in the said notice. The details were furnished. Despite these explanation and evidences filed, the ld. Pr. CIT had committed a factual error in concluding at page 10 para 5 of his order that the assessee has claimed capital loss on account of share transactions of M/s. Goodwill Griha Nirman Pvt. Ltd.. An order passed u/s 263 of the Act, based on a mistake of fact, cannot be sustained. This is not a case of non enquiry or non application of mind. The allegation of the ld. Pr. CIT is that the issue requires further verification and investigation. 11. In view of the above discussion, we quash the order passed u/s 263 of the Act and allow the appeal of the assessee. 12. In the result, appeal of the assessee is allowed. Kolkata, the 28th day of August, 2019. =============....