TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 946
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....n the circumstances of the case, the Ld. CIT erred in arriving at a conclusion without any basis whatsoever to the effect that the assessment order passed by the Assessing Officer was erroneous as well as prejudicial to the interest of the revenue. 3. On the facts and in the circumstances of the case, the Ld CIT erred in cancelling the assessment order passed by the Assessing Officer on officer to make a fresh assessment. 4. On the facts and in the circumstances of the case, the order passed by the Ld. CIT is bad in law since proper opportunity of being heard is not given to the appellant before passing the impugned order. 5. The appellant graves leave to add, alter, amend and/or withdraw any ground or ground of appeal either before or during the course of hearing of the appeal. 3. The assessee has raised following grounds of appeal in ITA No.3462/Ahd/2016 "1.In the facts and in the circumstances of the appellant's case, the Ld. CIT(A) grossly erred in upholding the assessment order passed by the Ld. AO under section 143(3) r.w.s. 263 of the Act. 2. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has grossly erred confirming the addition....
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....mined by the Ld. AO. 7. Aggrieved assessee is in appeal before the Tribunal challenging the order u/s 263 of the Act dated 04.02.2015 contending that the Ld. CIT wrongly assumed jurisdiction and impugned order passed u/s 263 is bad in law and liable to be quashed. 8. Ld. counsel for the assessee referring to the paper book running from pages no. 1 to 125 dated 30.11.2016 submitted that sale consideration of Rs. 23,00,000/- was received in respect of sale of immovable property at Nandakunj Cooperative Housing Society at Ahmedabad. This property was purchased during the F.Y. 2000-01 in joint name of assessee's father, assessee's mother, assessee's brother and assessee himself. During the year 2007 there were family dispute as a result assessee shifted to another house. There were no talking terms between the assessee and his father. In order to relinquish his rights in the investments made by his father in the joint names, an affidavit was executed on 25.11.20017, clearly stating on oath that the assessee relinquishes all his rights in favour of his parents and information about the alleged property was also mentioned in this affidavit. He also submitted that power of attorney was ....
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.... and the revenue's Special Leave Petition against this order was dismissed by the Hon'ble Supreme Court of India vide order dated 01.03.2019 reported at (2019)106 taxmann.com 31 (SC). 12. Per contra Ld. Departmental Representative (DR) vehemently argued supporting the order of Ld. CIT passed u/s 263 of the Act. She also submitted that the affidavit referred by the assessee was never placed before the Ld. AO. Copy of power of attorney executed by the assessee in favour of his father was also not placed before Ld. AO. The Ld. AO has also not conducted any inquiry about the capital gain offered by the assessee's father and has also not called for the complete chain of documents including the affidavit, proof of relinquishment of rights. Ld. DR also submitted that there was no mention about the alleged transactions of capital gain in the body of assessment order which shows that the Ld. AO has not conducted the inquiry of the alleged transactions. In support of this contention reliance was also placed on following judgments: 1. Glass Lines Equipments Co. Ltd. vs. CIT (2001) 119 taxman 813 (Guj) High Court of Gujarat 2. Babulal S. Solanki vs. ITO in ITANo.3493/Ahd/2016 ITAT, Ahmeda....
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....0; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or] Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or ....
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....s is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice ....
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....bout the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not by ....
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....the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as a erroneous order prejudicial to the interest of the revenue unless the view taken by the ITO is unsustainable". 19. Now facts which needs to be examined are whether the alleged transaction referred by the Ld. CIT in his order u/s 263 of the Act had come for consideration before the Ld. AO or not. 20. As regards the first transaction for the sale consideration of Rs. 23,00,000/- received from sale of immovable property jointly hold by the assessee's family members including his father, mother, brother and assessee himself and the disclosure of capital gain arising there from, we find that after the selection of the assessee's case for scrutiny proceedings notice u/s 142(1) of the Act was issued on 18.06.2012 placed in paper book pages 15 to 16. In this notices specific information has been asked at point no.4 which reads; "Please give details of movable (including vehicles, fixed deposits, investments in shares/stock etc.) and immovable properly held by you, either held jointly or in single name. Also give the details of any movable and/or immovable property were purchased during th....
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....is judgment of Hon'ble jurisdictional High Court in our view is quite relevant to adjudicate the issue before us. 15. The scope of the Commissioner's power of revision under section 263 has been a matter of judicial consideration on various ocassions. In case of Commissioner of Income Tax vs. Sunbeam Auto Ltd. reported in 332 ITR 167 Division Bench of Delhi High Court observed as under: "12. ... ... ... There are judgements galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not be 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 wou....
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....JUDGMENT Officer and that every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. It was further emphatically stated that when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Incometax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law." 19. In the context of present case, applying the ratio of the above noted decision, the scope of the Commissioner's power of revision u/s. 263 of the Act would be, when the Assessing Officer conducts no inquiry or proper inquiries or does not apply his mind to the legal issues arising out of the material on record, the revisional powers would be available. On the other hand, if the Assessing Officer has conducted proper inquiries and come to legal conclusions which are plausible, the Commissioner would not be justified in invoking revisional jurisdiction directing further inquiries or....
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....uestion is thus answered against the Revenue and in favour of the assessee. Tax Appeal is dismissed 28. Similarly in another case of Pr. CIT vs. Shree Gayatri Associates (supra) Hon'ble Jurisdictional High Court dismissed the revenue's appeal observing that "In particular , the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the assessing officer had carried out detailed inquiries which includes assessee's on money transaction. It was on account of these findings that the Tribunal was prompted to reverse the order of revision." Against the judgment of Hon'ble jurisdiction High Court in the case of Shree Gayatri Associates (supra), special leave petition filed by the Revenue before the Hon'ble Supreme Court was dismissed thereby confirming the judgment of Hon'ble High Court of Gujarat. 29. So on the basis of above judgment, we can infer that if detailed inquiry has been conducted by the Ld. AO and one of the legally permissible view is taken by the Ld. AO which may not be revenue favouring, cannot give power to the Ld. CIT to assume juri....