AI Drafter 
TaxTMI 
TaxTMI 
2021 (4) TMI 1084
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....sequently, an error was detected in the assessment order and a proposal was received in this office for review of the impugned order u/s. 263 of the Act. 3. On perusal of the said proposal of the AO, along with the records, prima facie it transpired that the Assessing Officer, namely ITO, Ward-28(4), Kolkata (hereinafter, the AO) had apparently failed to take a logical action on the information available with him, and accordingly, the impugned assessment looked erroneous in so far as it was prejudicial to the interest of revenue. Thus, a show cause notice initiating proceedings u/s. 263 of the Act was issued to the assessee vide letter No. PCIT-10/Kolkata/263/51/2018-19/5977 dated 22.11.2018, as reproduced ahead: ......"[Emphasis given by us] 4. On a perusal of the aforesaid averments made by the Ld. Pr. CIT it is evident that a proposal was received from the AO to him that he/AO has failed to take a logical action on the information available with him while framing the original assessment order passed u/s. 143(3) of the Act dated 24.08.2016 and so it require interference u/s. 263 of the Act and, therefore, he expressed his desire to invoke his revisional juris....
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.... According to the Ld. AR, once the AO passes the order u/s. 143(3) of the Act, he becomes functus officio and gets jurisdiction only u/s. 154 to correct apparent mistake on the face of the records or u/s. 147 of the Act for reopening the assessment that too after satisfying condition precedent given therein. Other than that according to the Ld. AR, the AO was not empowered by law to review his own order and leave alone recommend or put up a proposal to the Ld. Pr. CIT to revise his own order by stating that it is erroneous. If such a practice is allowed there will be no end to tax disputes/litigation and according to the Ld. AR, the power vested with the Ld. Pr. CIT has to be exercised by him alone and in the manner prescribed by section 263 of the Act and cannot be delegated to the AO which practise if allowed will create uncertainty/chaos in the assessment and will be against the basic feature of the Constitution 'Rule of Law'. Moreover, according to Ld. AR, since the AO has carried out enquiry in to the issue of LTCG, and passed the assessment order, in such a scenario, then if the Ld Pr CIT wishes to exercise his revisional power on that issue (LTCG). then only he can do so ....
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....nal is relevant to the issue at hand. However, he supported the impugned order of the Ld. Pr. CIT and does not want us to interfere with the order passed by the Ld. Pr. CIT. 10. Having heard both the parties and perused the records, we first of all note that the Ld. Pr. CIT has passed an identical order as in the case of Ritin Lakhmani & Ors. (supra) and only the name of the scrips and figures of LTCG are different. In the case of Ritin Lakhmani & Ors (supra) also, the Tribunal had noticed that the Ld. Pr. CIT has exercised his revisional jurisdiction on the basis of a proposal made by the AO; and that was also in respect of share trading wherein the assessee had claimed to have made LTCG. As noted except in the difference in the name of the shares/scrips and figures of LTCG, the facts and law pertaining to the issue are the same. In this case before us we note that pursuant to CASS, the AO had taken note of this issue i.e. Suspicious Long Term Capital Gain on Shares (inputs from the Investigation Wing) [ LTCG] and has called for the documents from the assessee to substantiate the genuineness of the transaction and pursuant to which the assessee had filed the documents 76 pages ....
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.... M/s. JRK Stock Broking Pvt. Ltd. The AO passed an order u/s 143(3) of the Act in all these cases and accepted the claim of the assessees for exemption u/s 10(38) of the Act. In this order the AO records that a letter u/s 133(6) of the Act was issued to M/s. JRK Stock Broking Pvt. Ltd., for verification of the transactions of sale of shares and that he had received a reply confirming the details filed by the assessee. The AO had concluded that he had not found anything adverse in the claim of the assessee for exemption u/s 10(38) of the Act. 3.1. The ld. Pr. CIT issued a show cause notice u/s 263 of the Act on 22.11.2018 proposing to revise the assessment order passed by the AO u/s 143(3) of the Act, on the ground that the AO should have treated the LTCG earned by the assessees as bogus credit and should have added back the entire credit u/s 68 of the Act, in view of the investigation conducted by the Directorate of Investigation, Kolkata, which had resulted in the unearthing of a huge syndicate of Entry Operators, stock brokers and money launderers involved in providing bogus accommodation entries of LTCG. The ld. Pr. CIT further mentions that it has come to light that, l....
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....m of the considered view that it is deemed fit and appropriate in the interest of justice to add back the entire sale consideration of the bogus penny stock shares, amounting to Rs. 35,78,311 /-, as unexplained cash credit u/s 68 of the Act. Further, the quantum of unexplained expenditure on account of commission payment to the tune of Rs. 1,78,916/- is also liable to be added back u/s 69C of the Act. Accordingly, I direct the AO to re-assess the income of the assessee for the relevant AY 2014-15 on the issue as discussed above." (Emphasis ours) 4. Aggrieved, the assessee is in appeal before us. 5. The ld. Counsel for the assessee, Mr. Subash Agarwal submitted that the order passed u/s 263 of the Act is bad in law, as the proceedings were initiated at the behest of the AO and not by the Pr. CIT, as required by the Act. He pointed out to para 2 & 3 of the order passed by the Pr. CIT u/s 263 of the Act, wherein it is clearly stated that the proposal for revision was received from the AO. He relied on the decision of this Bench of the Tribunal in the case of West Bengal National University of Juridical Science vs. CIT in ITA No. 2643/Kol/2019 order dated 30.....
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.... drew the attention of the Bench to page 3-11 of the order and submitted that the order of the Pr. CIT, in the case on hand, is identical, word to word, when compared from page 3 to 13 of this order. He submitted that this is just a cut & paste job being done by ld. Pr. CIT in every case which proves total nonapplication of mind. He vehemently contended that the ld. Pr. CIT clearly states that the transactions are suspicious but orders that the entire sale consideration be added by the AO u/s 68 of the Act. He submitted that it is well settled that additions cannot be made, based on suspicion. He submits that all these cases are covered by the order of the ITAT in the case of M/s. Girish Tikmani, HUF & Others (supra), both on facts and in law. 5.5. He submitted that there is no adverse material against the assessee and that the assessee was not confronted with any material or report of the Director General of Income Tax (Investigation) and additions directed to be made by the Pr. CIT was based only on suspicion and general statements and observations. He submitted that the order u/s 263 of the Act cannot be sustained under such circumstance. 5.6. The ld. Counsel f....
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....ed that the modus operandi of the scam and the manner in which exemptions were claimed to convert black money into white, are in the public domain and that he need not specifically argue these matters on merits. He submitted that the AO while examination of the purchase bills produced before him has failed to know that there is a time gap between the purchase and the date of payment, and submitted that this is a highly suspicious circumstance. He submitted that the entire family has indulged in these penny stock transactions. Referring to the case of Ritin Lakhmani, he submitted that the purchase bill was dated 16.09.2011 and whereas the payment was made only on 24.03.2012 i.e. after 6 months. He referred to Circular No. SMDRP/POLICY/CIR-32/99 dated 14.09.1999 and submitted that off market transactions were banned by S.E.B.I. and that the assessee should not have accepted such off-market transactions. He further referred to the CBDT Circular No. 23/2019 dated 06.09.2019 for the proposition that, appeals can be filed in all penny stock matters before ITAT, High Court and Supreme Court irrespective of the monetary limits. He referred to the theory of preponderance of probabilities an....
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.... proceedings u/s 263 of the Act was issued to the assessee vide letter No. PCIT-10/Kolkata/263/50/2018-19/5976 dated 22.11.2018 as ahead." (Emphasis Ours) 10. A perusal of the above shows that it was the AO had detected an error in the assessment order and proposed to the Pr. CIT that the order passed u/s 143(3) of the Act passed by the AO be revised u/s 263 of the Act by the Pr. CIT. These two paragraphs do not state that the ld. Pr. CIT had on examination of the records initiated proceedings u/s 263 of the Act. The Pr. CIT has, after perusing the proposal of the AO, which was before him along with the record, came to a prima facie conclusion and initiated proceedings u/s 263 of the Act. Nowhere does the Pr. CIT state that he has examined the record. 11. Though in the show cause notice, the ld. Pr. CIT states that "on examination of records" errors were observed, the fact remains that a proposal from the AO along with the record was received and was perused (not examined) and the revisionary powers u/s 263 of the Act was initiated by the ld. Pr. CIT. 12. The proposition of law on such facts has been discussed and applied by the Kolkata 'C' Bench....
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....f the revenue, he may after giving opportunity of being heard to the assessee pass orders as prescribed under the Act. So, the power vested in the CIT is that of revisional jurisdiction to interfere with the order of AO, if it is erroneous in so far as prejudicial to the revenue and, therefore, the power to exercise the revisional jurisdiction is vested only with the Pr. Commissioner/Commissioner if he considers the order of the AO to be erroneous in so far as prejudicial to the interest of the revenue. Therefore, this power is vested with the Pr. CIT/CIT to exercise revisional jurisdiction is only when he considers that the order passed by the AO is erroneous in so far as prejudicial to the interest of the revenue and that power cannot be usurped by the AO to trigger the revisional jurisdiction vested with the CIT as per the scheme of the Act which gives various power to various authorities to exercise and they have to exercise powers in their respective given sphere which is clearly ear-marked and spelled out by the statute. Here, we note that the AO who is empowered by the Act to assess a subject within a prescribed time period has first assessed the assessee and later ....
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....e case of M/s. Girish Tikmani, HUF and Others and Manisha Tikmani vs. ITO (supra) had adjudicated a case with identical facts. In fact, words and paragraphs written by the ld. Pr. CIT in those orders are, verbatim the same as the wording of the Pr. CIT in this order. For ready reference para 3 page 3 to 11 of that order where para 5 to 5.12.3 and para 6 of the 263 order were extracted, so that it can be compared with the paragraph numbers and words that are in this impugned order of the Pr. CIT. "The same stand rejected in the PCIT's order under challenge as follows:- "5. The issue under consideration in this case is that as to whether the impugned transactions of purchase and sale of shares were indeed bogus in nature and accordingly whether the entire amount of sale consideration should have been added back or not. 5.1 From the records, it is seen that credible information was available in the custody of the AO from which it was clear that the assessee had adopted the practice of accepting accommodation entries and in turn entered into bogus transactions to the tune of RsS3,63,S18/-. As per above, during the previous year 2013- I 4, corresponding to AY ....
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.... in smaller operations, the same group performs more than one function. The Transaction The transaction involves three legs. i) Purchase of shares by the beneficiary: In this the beneficiary sold a fixed number of shares at a nominal rate. The price and the number of shares to be purchased are decided on the basis of the booking taken and the value up to which price would be rigged This leg of the transaction mostly is off-line. This is done to save on SIT using the loophole in Section 10(38) of the IT Act which places restriction of trading by payment of SIT on sale of shares and not purchase. ii) Price rigging: After the shares have beef) purchased by the beneficiaries, the syndicate members start rigging the price gradually through the brokers. In these transactions the volume is almost negligible. Two fixed brokers who are in league with the Syndicate buy shares at a fixed time and at a fixed price. These low volume transactions are managed through paper companies/HUF or dummy persons maintained and controlled by the entry operators. iii) Final sale by the beneficiary: This is done after the beneficiary has already held the shares fo....
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....n noted that many common persons/entities were involved in trading in more than 1 LTCG companies during the period when the shares were made to rise which implies that they had contributed to such price rise. (8) Names of most of the LTCG companies are changed during the period of the seam. (9) Most of the companies split the face value of shares [this is probably done to avoid the eyes of market analysts. (10) The volume of trade jumps manifold immediately when the market prices of shares reach at optimum level so as to result in LTCG assured to the beneficiaries. This maximum is reached around the time when the initial allottees have held the shares for one year or little more and, thus, their gain on sale of such shares would be eligible for exemption from Income Tax. (11) An analysis of share buyers of some of LTCG companies was done to see if there were common persons/entities involved in buying the bogus inflated shares. It was noted that there were many common buyers [which were paper companies. (12)The prices of the shares fall very sharply after the shares of LTCG beneficiaries have been off loaded through the pre-arran....
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....sayat (Retd.) as Chairman and Vice Chairman respectively of the 11 member Special Investigation Team(SIT) of the Hon'ble Supreme Court of India on Black Money have pointed out the above mentioned modus operendi in the Third SIT report on Black Money. The recommendations of the SIT on black money as contained in the third SIT report as given below, deserve a look: Press Information Bureau Government of India Ministry of Finance 24-July-2015 15:45 1^ST Recommendations o(SIT on Black Money as Contained in the Third SIT Report Misuse of exemption on Long Term Capital gains tax/or money laundering (Reference p. 82-84 of the Third SIT Report) This issue was deliberated by SIT during a series of meetings held on 1" January, 14'" March, 08th April and 3rd April. In this regard, it is pertinent to mention the observations of the Committee headed by Chairman, CBDT on "Measures to tackle Black Money in India and Abroad" which submitted its report in 2012 and which read as follows:- "3.22 Investments are made in the secondary share markets with a view to capturing gains. In this market; out of nearly 8,000 listed companies, several scrips....
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....are this information with CBDT and FIU. * Barring such entities from securities market would no: be of strong deterrence in itself. In case it is established, that stock platforms have been misused for taking LTCG benefits, prosecution should invariably be launched under relevant sections of SEBI Act. Section 12A. read with section 24 of the Securities and Exchange Board of India Act 1992 are predicate offences. * Enforcement Directorate should then be informed to take action under Prevention of Money Laundering Act for the predicate offences. 5.6.1 On perusal of the records available, it is found that the scrip of 'UNNO INDUSTRIES LTD is amongst the 84 penny stocks where artificial rigging of prices were made for the desired purpose. 5. 6.2 On perusal of the financial results for last few years including years from purchase to sale, it is seen that the financial health of the company had been deteriorating continuously had increased insignificantly. However, the share price and market capitalization of the scrip was shooting up almost vertically. The catapult rise of its shares defied logic as even the blue chip companies which have bulk mar....
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....ion entry providers under the shell of director, share broker etc. to bring his unaccounted income into the regular books of accounts in the form of claim of exemption u/s 10(38) of the Action LTCG. 5.6.6 A microscopic view of all such data suggests that there is a common pattern in the trading of all such scrips and the pattern is that they represent a bell shape in their trading. It means first, their prices start from a low range, then it rises rapidly, stays there for a while and then it decreases more rapidly. Thus the trading pattern represents a Bell Shape[ Annexure A and made part of the order] 5.6.7 Ultimately SEBI vide its order dated 29.03.2016 has restrained some persons/entities from accessing the securities market and buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever, till further direction. The list includes the name of Unno Industries Ltd besides various other companies. 5.7 Further, in light of the above chronology of events, the Income Tax Authorities are entitled/ obliged to look into the details of the documents produced and make thorough investigation into the transactions to find out the actual ....
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....5% of Rs. 53,63,518-] to obtain the above said accommodation entry. In view of the above, the unexplained expenditure of Rs. 2,68,1761- also needs to be added back U/S 69C of the Act (taxable at the rate 0[30% as provided U/S 115BBE). 5.9 Reference is also drawn to the judicial pronouncement of the Apex Court in the case of N.K.Proteins Ltd. v. Deputy, Commissioner of Income-tax SPECIAL LEAVE TO APPEAL(C) NO.769 OF 2017 JANUARY 16, 2017, as reported in [2017] 84 taxmann.com 195 (SC), wherein the High Court's decision to add back the entire bogus purchase as per the fictitious invoices debited to trading account holding that percentage disallowance of bogus purchases goes against principle of Sec 68 and 69C of the Act, was upheld by the Apex Court. 5.10 It is imperative on the part of the Assessing Officer to examine each and every transaction and finally to assess correct income of the assessee. In this case, the assessment order was passed without arriving at the logical conclusion on the corroborative material, available at the disposal of the AO. 5.11 In this connection it is pertinent to note that the failure on the part of the Assessing Officer t....
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....12.2 The spirit of this ratio is squarely applicable in a recent judgment, wherein the order u/s 263 passed by the PCIT was upheld in the case of M/s. Vama Sundari Investment (Delhi)(P) Ltd vs. Pr. CLT. - 9, New Delhi (ITA No: 22521De1l2018) by the Hon'ble ITAT, Delhi F Bench, New Delhi. In doing so, the Hon'ble ITAT had placed reliance on the following orders: * Hon'ble Supreme Court in the case of Deniel Merchants Pvt. Ltd. vs. ITO (Appeal No. 2396/20171 dated 29.11.2017. In this group of cases, Hon'ble Supreme Court has dismissed SLPs in cases where AO did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry thorough and detailed inquiry. * MaJabar Industrial Co. Ltd. Vs CIT l09 Taxman 66 1SCl71 [20001 243 ITR 83 (SC)/20001 159 CTR 1 (SC) wherein the Hon'ble Supreme Court held that where Assessing Officer had accepted entry in statement of account filed by assessee, in absence of a....
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....s also liable to be added back u/s 69C of the Act. Accordingly, I direct the AO to re-assess.the income of the assessee for the relevant AY 2014-15 on the issue as discussed above." 15. The ld. Pr. CIT has simply cut and pasted para 5 to para 5.12.3 and also para 6 from the orders he had passed u/s 263 of the Act from the order of the Pr. CIT passed u/s 263 of the Act in the case of M/s. Girish Tikmani & Others. Only in para 7, the quantum of addition, or the figures of addition have varied from case to case. This shows that the same general observations and reasons have been given by the ld. Pr. CIT in all cases where he took action u/s 263 of the Act, in cases where there was a claim of deduction u/s 10(38) of the Act on LTCG and where the claim was accepted by the AO. 16. Based on this "cut and paste" reasoning, the ld. Pr. CIT has directed the AO to make additions u/s 68 of the Act of the entire sale consideration received by each of the assessees on the sale of shares, as well as addition u/s 69C of the Act, of an assumed commission payment u/s 69C of the Act. No evidence is brought on record except for stating generalities. SIT recommendations were cited, bu....
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....sue to the file of the ld. AO for fresh adjudication in accordance with law after giving the assessee adequate opportunity of being heard. This was not done. 19. In our view all these cases are squarely covered by the judgement of this Bench of the Tribunal in the case of M/s. Gitsh Tikmani, HUF and Others (supra) where from para 8-10 held as follows: "8. We have given our thoughtful consideration to rival contentions. The sole issue that arises for our apt adjudication in facts of instant case is as to whether the PCIT has rightly exercised his revision jurisdiction vested u/s 263 or not. There is no dispute that the Assessing Officer accepted the assessee's LTCG as genuine as per his discussion in the assessment order that he had verified all necessary facts during the course of scrutiny. Suffice to say, the same fact very much emerges not only from assessee's detailed paper book running into 98 pages but also from the relevant assessment notings forming part of record (supra). This tribunal's co-ordinate bench's decision in case of M/s Saregama India Ltd. vs. CIT-1, Kolkata ITA No.1254/Kol/2014 decided on 20.09.2017 has reiterated the following settled principl....
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....V. CIT (1973) 88 ITR 323 (SC)". 25. In Max India Ltd. (3 Supra), reiterated the view in Malabar Industrial Co.Ltd. (2 Supra) and observed 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. For example, 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 Income Tax 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. On the facts of that case, Sec.80HHC(3) as it then stood was interpreted by the Assessing Officer but the Revenue contended that in view of the 2005 Amendment which is clarificatory and retrospective in nature, the view of the Assessing Officer was unsustainable in law and the Commissioner was correct in invoking Sec.263. But the Supreme Court rejected the said contention and held that when the Commissioner passed his order disagreeing with the view of the Assessing Officer, there we....
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....er called for interference and revision. 27. In Sunbeam Auto Ltd.( 5 Supra), the Delhi High Court held that the Assessing Officer in the assessment order is not required to give a detailed reason in respect of each and every item of deduction, etc.; that whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. In that case, the Delhi High Court held that the Commissioner in the exercise of revisional power....
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....er concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income Tax Officer; but that would not vest the Commissioner with power to reexamine the accounts and determine the income himself at a higher figure; there must be material available on the record called for by the Commissioner to satisfy him prima facie that the order is both erroneous and prejudicial to the interests of the Revenue. Otherwise, it would amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re-examination and fresh inquiry in matters which have already been concluded under law. 29. In M.S. Raju (15 Supra), this Court has held that the power of the Commissioner under Sec.263(1) is not limited only to the material which was available before the Assessing Officer and, in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment. ....
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....tu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suo motu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. e) The Commissioner cannot initiate proceedings ....
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.... authority against an order passed by the Assessing Officer. S. 263 has been enacted to empower the CIT to exercise power of revision and revise any order passed by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expression "prejudicial to the interest of the Revenue" is of wide import and is not confined to merely loss of tax. The term "erroneous" means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word "erroneous" includes failur....
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....erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. It may be noticed that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. ....
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....ons. 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 Technologies Ltd., 341 ITR 293 (Karnataka); S.N. Mukherjee vs. Union of India, AIR 1990 SC 1984; A. A. Doshi vs. JCIT, 256 ITR 685; Hindusthan Tin Works Ltd. Vs. CIT, 275 ITR 43 (Del), distinguished. (Paras 90-92, 102) COMMISSIONER OF INCOME TAX vs. SOHANA WOOLLEN MILLS 296 ITR 238 (P&H HC) A reference to the provisions of s. 263 shows that jurisdiction thereunder can be exercised if the CIT finds that the order of the AO was erroneous and prejudicial to the interest of Revenue. Mere audit objection and merely because a different view co....
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....ord by the CIT which showed that there was any discrepancy or falsity in evidences furnished by the assessee, the order of the AO cannot be set aside for making deep inquiry only on the presumption and assumption that something new may come out. For making a valid order under s. 263 it is essential that the CIT has to record an express finding to the effect that order passed by the AO is erroneous which has caused loss to the Revenue. Furthermore, where acting in accordance with law the AO frames certain assessment order, same cannot be branded as erroneous simply because according to the CIT, the order should be written more elaborately.-Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC), Gee Vee Enterprises vs. Addl. CIT 1975 CTR (Del) 61 : (1975) 99 ITR 375 (Del), CIT vs. Seshasayee Paper & Boards Ltd. (2000) 242 ITR 490 (Mad), CWT vs. Prithvi Raj & Co. (1991) 98 CTR (Del) 216 : (1993) 199 ITR 424 (Del) and J.P. Srivastava& Sons (Kanpur) Ltd. vs. CIT (1978) 111 ITR 326 (All) relied on. (Paras 6 & 7) In the entire order emphasis laid by the CIT is that in respect of four issues mentioned by him, no queries were raised by ....
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....eld that ordinarily the income is said to have accrued to a person when he acquires the right to income and this should be enforceable right, though actual quantification or receipt may follow in due course. The mere claim to income without any enforceable right cannot be regarded as an accrued income for the purpose of IT Act. (Para 16) Coming to the claim under s. 80HHC, it was totally uncalled for on the part of the CIT to say that the AO did not make requisite inquiries because of the simple reason that the AO had, in fact, declined and rejected this claim of the assessee. If the AO himself disallowed the deduction claimed by the assessee on this account under s. 80HHC, one fails to understand what further inquiries were needed by the AO. (Para 17) Lastly, the observations of the CIT are in respect of the income of Rs. 1.61 crores shown by the assessee on account of variation in exchange rate. The CIT has only observed that in the immediate previous year no such gain was shown and therefore, it needed examination by the AO. However, the moot question would be examination for what purpose ? It is an income shown by the assessee. Whether the CIT was of ....
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....Making rowing enquiries is not a finding of an error. Assessments cannot be set aside for fresh enquiries unless a specific error is pointed out at not making proper enquiry cannot be equated with no enquiry. In view of the above we quash the order passed u/s 263 of the Act and allow the appeal of the assessee. 12. In the result the appeal of the assessee is allowed" Keeping in mind the foregoing detailed discussion that an assessment has to be both erroneous as well as prejudicial in interest of the Revenue simultaneously before the same is sought to be revised and it is not permissible for the CIT or the PCIT to exercise his revision jurisdiction in case the Assessing Officer has taken one of the possible view, we proceed to deal with the relevant facts of the case. It has come on record that the Assessing Officer had issued sec. 133(6) letter / notice to the M/s SHCL during the course of scrutiny which stood adequately replied in assessee's favour. Coupled with this, all the relevant factual details in support of the assessee's share purchase document, contract notes, bank statement, (supra) already in the case records. Coupled with this, Learned CIT-D....