AI Drafter 
TaxTMI 
TaxTMI 
2020 (5) TMI 360
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....pugned order dated 30.03.2019 passed by the Pr. Commissioner of Income Tax ("PCIT") under section 263 of the Income-tax Act, 1961 ('the Act') is beyond jurisdiction, illegal and bad in law and is liable to be quashed. 2. That the Pr. CIT erred in initiating proceedings under section 263 of the Act on the basis of an draft order which was passed in contravention of the mandate as per the High Court direction vide order dated 06.12.2016 and hence was void ab initio and as such no proceedings could have been initiated on the basis of an invalid/illegal order. 3. That on the facts and circumstances of the case and in law, the order passed by the PCIT u/s 263 of the Act is a premature order, in as much was is no order capable of being revised. 4. That without prejudice to the above grounds the AO ought to have considered that once a reference u/s 92CA(1) of the Act was made in the original proceedings to the Transfer Pricing Officer, it was incumbent upon him to pass a draft assessment order instead of passing a final assessment order dated 30.03.2019 failing which the entire assessment proceedings and all consequential proceedings are invalid, non-est and voi....
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....(3) of the act was passed on 29/1/2013. On objections filed before the learned Dispute Resolution Panel - III, [ The Ld. DRP] same were disposed of by issuing direction u/s 144C (5) of The Income Tax Act 1961 on 31/12/2013. Final order u/s 144C read with section 143 (3) of the act was passed on 16/1/2014 with an assessed income of INR 13221335445/-. 04 Subsequently, reasons were recorded by the learned Assistant Commissioner of Income Tax, Circle - 1, Gurgaon and case was reopened. Assessee sought reasons recorded. Same were provided on 29/6/2016.Against which assessee filed an objection on 19/8/2016. Objections were disposed of on 25/11/2016. Assessee aggrieved with the initiation of reassessment proceedings filed the petition before Honourable Punjab and Haryana High Court in civil writ petition number 25150/2016. Per order, honourable High Court held that reassessment proceedings may continue and if the order passed by the assessing officer is adverse to the petitioner, it shall not be implemented till further orders. Honourable High Court clarified that passing of the order would not prejudice the maintainability of petition including any of the contentions raised therein. ....
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....ted 30/12/2016 was neither 'erroneous not prejudicial to the interest of the revenue' the issues raised in the present revision proceeding initiated under section 263 of the act are without jurisdiction, illegal and bad in law. Since the reassessment proceedings under section 147 of the Act itself are only without jurisdiction, illegal and bad in law, the consequential revision of the proceedings under section 263 of the act is also without jurisdiction, illegal and bad in law. It was further stated that since the reassessment order under section 147 sought to be revised, itself is pending before Punjab and Haryana High Court for adjudication and as per the interim order of the honourable High Court the same should not be 'implemented'. Therefore, the order which cannot be implemented cannot be held to erroneous and prejudicial to the interest of revenue as it does not exist at all. 08 Thereafter, on 30 March 2019, the learned Principle Commissioner Of Income Tax passed order under Section 263 of the Income Tax, 1961, as under: "Order under section 263 of the Income Tax Act, 1961 In this case, the assessee furnished its return for the A.Y.2009-10, and completed....
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....ng officer should not be set aside being erroneous and pre-judicial to revenue. Mr Sanjay Jain. ('A attended the proceedings on 20.3.2019 and submitted reply which has been considered with due care. In the reply, it is also submitted that the assessment order is neither erroneous nor prejudicial to the interest of revenue and therefore the notice is invalid, illegal. The reply also contains various case laws, which have been considered carefully, it is found that the facts of the case laws are not exactly same as that of the instant case. Hence, having considered the case laws; reply of the assessee and having gone through the record of the assessee regarding the legal and factual contentions on the validity of taking action u/s 263 of the Income Tax Act, 1961. In this regard, it is pertinent to keep in view the following issues and observation on the basis of which findings are being made. On going through the provisions of section 263(1) of the Income Tax Act, 1961, It is clear that any order passed by the Assessing Officer can be revised if it is found to be erroneous in so far as it is prejudicial to the interest of revenue. It is, therefore, clea....
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....T ITA 280 of 2013. Relying upon the case of M/s Chandigarh Theatres Pvt. Ltd. In IIA No 715/Chandi/2007 and CIT Vs. Nova Promoters ftFinlcase (P.) Ltd.. the A O is to check Whether the transaction is merely accommoda.ion entries and whether it is non genuine. In this regard, it may also be noted that the Hon'ble Delhi High Court in Gee Vee Enterprises v. Addl. CIT [1975] 99ITR 375 (Delhi) has observed as under:- "The reason is obvious. The position and function of the Income-lax Officer is very different from that of a civil court. The statements made in a pleading proved by the minimum amount of evidence may be accepted by a civil court in the absence of un\ rebuttal The civil court is neutral It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only an adjudicator hut also an investigator. He cannot remain passive in the face of a ret inn which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts slated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to he given to the word "erroneous" in secti....
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....the Act, which was subject matter of revision by the learned PCIT is barred by limitation u/s 263 of the Act. He submitted that notice dated 27.02.2019 was issued u/s 263 of the Act culminated into the order u/s 263 of the Act on 30.03.2019 and the impugned order which was revised was passed u/s 147 of the act on 30.12.2016. He submitted that reassessment proceedings were initiated for separate reasons. He referred to the reasons recorded under Section 148 of the Act dated 29.06.2016 and submitted that the claim of deduction u/s 80IA and 80IB which talks that captive power plant does not qualify as an 'industrial undertaking.'Further, no separate books of accounts were maintained. He, therefore, submitted that reopening of the assessment was made for these purposes, whereas the revision is proposed of the reassessment order on altogether different grounds, which were not part of the reasons for reopening of the assessment. He submitted that as the issues on which revision is sought were not at all the reasons for which assessment was reopened. Therefore limitation for passing order u/s 263 of the act on the issues which were not part of reassessment proceedings, should run from the....
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....on the decision of the coordinate bench in case of Narayan Tatu Rane V ITO [70 taxman.com 227]. VI. He further submitted that even otherwise the reliance on reference to Justice Shah commission report in the notice is improper and not want warranted for the reason that commission i. did not issue any notice to the assessee, ii. giving it a reasonable opportunity of hearing or iii. to produce evidence in their defense or iv. to cross examine witnesses before the commission or v. put forth the representation of the assessee. Therefore, the Commissions violated the principles of natural justice. For this proposition he referred to the decision of the honourable High Court in order dated 9/7/2019 in case of Sesa Sterlite Ltd versus ACIT where a similar position has been taken and held that issuance of notice under section 147 read with section 148 on the basis of the Shah Commission report is illegal. VII. Even otherwise, he submitted that the notice issued by the learned Principal Commissioner of Income Tax did not grant proper opportunity of hearing to the assessee. He stated that notices were issued on 27/2/2019....
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....xactly related to the instant case. iii. Further, he submitted that ld PCIT on perusal of the assessment records clearly heldthat records show that the AO has not made any independent inquiries and questioned about the incorporation of the above facts in the books of accounts of the assessee for the relevant assessment year. It has been categorically held that since the assessing officer has failed to verify the enquiry report recommendations the order so passed by the AO has been erroneous and prejudicial to the interest of the revenue. iv. He submitted though in certain paragraph there are certain references which do not relate to the case of the assessee but that does not invalidate the order passed by the learned principal Commissioner of income tax. He submitted that there may be some typographical errors, but clear-cut finding in the order about lack of inquiry by AO shows that there is proper application of mind by PCIT. v. He further referred to the introduction of explanation[2] in section 263 of the income tax act with effect from 1 June 2015 wherein it has been held that when an order is passed without making enquiries or verification which sho....
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....filed a revised return u/s 139 (5) of the Income Tax Act 1961, showing total taxable Income at Rs. 987,31,790/- 29.03.2013. The draft assessment order u/s 144C r.w.s. 143 (3) of the Income Tax Act, 1961 was passed by the AO on 29.01.2013. The final order u/s 144C r.w.s. 143 (3) of the Income Tax Act, 1961 was passed by the A.O. on 16/01/2014 determining the total income at Rs. 13,22,13,35,445/-. 2. From perusal of the records for A.Y. 2009- 10, it has been observed that the assessee company has claimed deduction u/s 801A of the Income Act, 1961 to the extent of Rs. 419,30,71,772/- and u/s 80IA of the Income Tax Act, 1961 to the extent of Rs. 16,16,10,227/-. In the assessment order U/s 144C r.w.s. 143(3) of the Income Tax Act, 1961 was passed on 16/1/2014 the claim of deduction has been allowed to the extent of Rs. 270,37,96,655/-. However, during assessment proceedings for A.Y. 2011-12 the Assessing Officer found that the Assessee does not qualify for deduction u/s 801A and 801B of the Income Tax Act, 1961. Similarly during proceedings U/s 263, the Commissioner of Income Tax Act, Hisar also noted that on merits the assessee company-does not qualify for deduction u/s 80IA a....
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....oss account, balance sheet, separate unit-wise audit report, ledgers of sundry debtors and creditors and details of assets and liabilities of the eligible units. The assessee has also not explained how value of coal fines, rejected coal, cost of steam, direct and overhead expenses had been computed. There are no details and bills/vouchers (with costing) in respect of coal and iron-ore purchases and unit-wise use. Also tax audit report P&L., balance sheet and details of loan funds have to be separate from the rest of the units. 6. It is worth mentioning that the Commissioner of Income Tax, Hissar and the A.O. in A.Y. 2005-06 and A.. 2011-12, respectively, conducted detailed enquiries and reached the conclusion that the assessee is not entitled to deduction u/s 801A and 801B of the Income Tax Act, 1961. 7. In view of the factual position deduction u/.s 801A 801B of the I.T. Act is not allowable to the assessee in this year also. Excess claim of deduction u/s 801A and 801B of the I.T. act has been wrongly claimed and allowed. Hence I have reason to believe that the income of the assessee to the extent of Rs. 270,37,96,648/- chargeable to tax has escaped assessment be....
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....nal assessment u/s 143 (3) of the act and not in reopened assessment. Therefore in such circumstances, if Ld. PCIT wants to touch any issue of the original assessment order, the time limit for passing the order us/ 263 of the act should run from the date of the original order passed u/s 143(3) of the act and not the subsequently reopened assessment order u/s 147 of the act. 16 Hon supreme court in CIT V Algandrean Finance Limited [(2007) 75 CCH 0720 ISCC(2007) 211 CTR 0069, (2007) 293 ITR 0001, (2007) 162 TAXMAN 0465 has held that:- "15. We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the CIT exercising its revisional jurisdiction reopened the order of assessment only in relation to lease equalization fund which being not the subject of the reassessment proceedings, the period of limitation provided for under sub-s. (2) of s. 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment. The revision jurisdiction having, thus, been invoked by the CIT beyond the period of limitation, it was wholly without jurisdict....