TaxTMI 
TaxTMI 
2019 (11) TMI 1000
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....63 of the Income Tax Act, 1961 in the appellant's case without considering the material fact that no valid search under the provisions of section 132 of the Act had ever been carried out in the premises of the appellant firm which was a pre-condition for framing the assessment order under section 153A which remained to be the subject matter of the impugned order under section 263 of the Act. 2a. That without prejudice to the above, the Ld. CIT grossly erred in invoking the provisions of section 263 of the Income Tax Act, 1961 in the appellants case without considering the material fact that the assessment order passed by the Learned Assessing Officer was neither erroneous nor prejudicial to the interest of the Revenue. 2b. That, without prejudice to the above, the Ld. CIT grossly erred, both on facts and in law, in assuming the jurisdiction u/s 263 of the Income Tax Act, 1961 without considering the material fact that during the course of the assessment proceedings, on the issue of alleged unaccounted profit from sale of land, the AO had raised specific queries, to which the appellant had replied fully with support of documentary evidences and finally, the AO had ....
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....unaccounted sales ought to have been taken at Rs. 3.89 Crores however the AO has made addition only of Rs. 1,36,28,906/-. In response to the notice issued the assessee filed its objection. The objections of the assessee were that assessment order passed by the AO itself is a illegal, void-ab-initio and a nullity and therefore, the provisions u/s 263 of the Act cannot be invoked in respect of such order. Further, another objection was that an appeal was pending before the Ld. CIT(A) in respect of the same issue, therefore, invoking the provisions of section 263 of the Act is illegal and contrary to the settled law. It was also submitted before the Ld. CIT(A) that the AO had examined the issue thoroughly during the assessment proceedings. Therefore, the assessment order cannot be termed as erroneous and prejudicial to the interest of revenue. 4. Ld. Pr. CIT did not accept the objections of the assessee and proceeded to revise the assessment order by way of the impugned order, the assessment order dated 30.03.2006 was set aside and the Assessing Officer was directed to reframe the assessment after examining the issues and carrying out the necessary inquiries. 5. Aggrieved by thi....
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....uantification of unaccounted income from sale of land ought to have been made at a higher amount than that was made by the assessing officer. It is contended that only point of difference is that methodology adopted by the AO and Ld. Pr. CIT. It is related to the estimation of total market value (sales value) of land admeasuring 3.93 hectares. The assessing officer adopted the value at Rs. 1817.43 lakhs whereas the Ld. Pr. CIT is of the view that valuation ought to have been at Rs. 2250.00 lakhs and instead of taking figure of the net sales the gross amount ought to have been taken. He submitted that without admitting the sanctity of the excel sheet alleged to have recovered during the course of search. He contended that the excel sheet is to be considered in entirety. It is submitted that if AO presumed that the valuation of total sales amount at Rs. 2250 lakhs on the basis of the excel sheet, and then the AO was also duty bound to give the credit for various expenses at Rs. 432.57 lakhs as reflected in the same excel sheet. Thus, in any eventuality, the net sales amount could not have been taken more than Rs. 1817.43 lakhs as shown in the seized excel sheet and this is what ex....
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....A.Y. 2012-13. However, the AO did not compute in such a manner which resulted in under assessment of Rs. 2.53 crores. It is submitted by the Ld. CIT-DR that all the expenses of Rs. 4.33 crores claimed by the assessee firm are unaccounted and not supported with any evidence, the same could not be allowed for deduction from total sales of Rs. 22.50 crores. Since no corroborative evidence in regard to these expenses has been furnished during the assessment proceedings, it clearly proves that the expenses of Rs. 4.33 crores have been incurred from unaccounted source which may be deemed as unexplained expenses. Hence, the AO is not correct in adopting the total sale value of Rs. 18.17 crores instead of Rs. 22.50 cr. 12. The AO adopted wrong methodology and did not make proper application of mind while passing assessment order. The assessee cannot be allowed to set-off unaccounted expenses from the total sale receipts. This was the reason why the provision of section 263 has been invoked. In respect of the objection of the Ld. counsel for the assessee regarding pendency of appeal before the Ld. CIT(A), in respect of the same assessment Ld. CIT-DR relied upon the provisions of se....
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....in such appeal." In the instant case the issue has not been decided by the CIT(A) as on date." 14. From the above finding, it is clear that the objection is not properly adjudicated. Ld. Pr. CIT has relied upon clause (c) of explanation (1) to section 263 of the Act. For the sake of clarity, explanation (1) to section 263 of the Act is reproduced as under: 263(1) The [Principal Commissioner or] Commissioner may call for and considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. [Explanation 1]-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,-- (a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include- (i) an order of assessment made by the Assi....
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....of JMC Projects India Ltd. Vs. Pr. CIT (supra) has held as under: 16. Under the circumstances, we do not think that the powers under section 263 of the Act can be exercised when, though addition has been made, on the footing of the premises which are not to the satisfaction of the Commissioner and, therefore, to make additions on better premises with better reasoning on different application of legal principles. 17. In the result, in our opinion, the Commissioner lacked jurisdiction to issue the impugned notice. When the question is the very foundation of the notice and jurisdiction of the Commissioner to exercise such powers, the question of relegating the petitioner to alternative remedy or to permit the Commissioner to complete the proceedings and thereafter to direct the petitioner to take appeal route does not arise." 15. Further, the Hon'ble Madras High Court in the case of Smt. Renuka Philip Vs. ITO in Tax case appeal No.286 of 2012 after examining the law held as under: 16. Further, the coordinate bench of this Tribunal in the case of GAD Fashion Vs. Pr. CIT (supra), wherein the coordinate bench of this Tribunal held as under: "....
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....ore the Commissioner of Appeals, and in such circumstances, the Commissioner could not exercise power under Section 263 of the Act on account of the statutory bar. Therefore, on this ground also, the assumption of jurisdiction under Section 263 of the Act was wholly erroneous." 18. In the present case as well, the larger issue regarding valuation adopted by the A.O. is pending before the Ld. CIT(A). Therefore, respectfully following the judgement of the Hon'ble Madras High Court, we hold that Ld. Pr. CIT was not justified to invoke the jurisdiction u/s 263(1) of the Act when the similar issue was pending before Ld. CIT(A). Therefore, the impugned order is set aside and the grond raised qua this issue is allowed. Moreover, the revenue has not brought to our notice any other contrary binding precedents. However, it is made clear that the revenue would be at liberty to approach Ld. CIT(A) for expediting disposal of the appeal. The other objections of the assessee are on merit of addition made by the assessing officer. Since we have set aside the impugned order on the ground that similar issue is pending before Ld. CIT(A), the remaining grounds have become of academic inte....
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....ts 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. Commissioner of Income Tax [(2012) 252 CTR 0336], 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 circumstances. In this regard, we refer to Section 263(1) explanation 1(c), which reads as follows: "Revision of orders prejudicial to revenue 263(1)... (a)... (b)... (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 C....