TaxTMI 
TaxTMI 
2021 (5) TMI 70
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....assessee during the year. 2.1. The ld. Pr. CIT, Kolkata - 4, issued a show cause notice dt. 25/07/2016, proposing to revise the assessment order passed u/s. 143(3) of the Act on 15/03/2015, by invoking his powers of revision u/s. 263 of the Act. After considering the reply of the assessee dt. 22/08/2016, the ld. Pr. CIT, Kolkata -4, passed an order u/s. 263 of the Act on 07/09/2016 (first 263 order)setting aside the original assessment order passed u/s. 143(3) of the Act on 15/03/2015 and directing the Assessing Officer to redo the assessment de novo with certain directions. At Para 4(v) of the order passed u/s. 263 of the Act, dt. 07/09/2016, the ld. Pr. CIT-4, Kolkata, held as follows:- "4(v) Considering the above facts and circumstances of the case, the assessment order passed on 15.03.2015 is set aside denovo with a direction to AO to carry out proper examination of books of accounts and Bank accounts of assessee as well as investors. A.O. is also directed to examine the source of share application, identity of investor and its genuineness and issue of purchase & sale of seeds. The assessment proceedings may be initiated at the earliest and to be completed without waiting ....
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....notice u/s. 263 of the Act, dt. 28/01/2019 to the assessee company, to show cause as to why the assessment order passed u/s. 143(3) r.w.s. 263 of the Act, dt. 26/12/2016, should not be revised. The sole reason for giving show cause notice, is stated as follows:- "On perusal of the records it is seen that total income as determine as per 'Order' is less than the total income as assessed as per order u/s. 143(3) of the 'Act' dated 15.03.2015. Therefore, the impugned 'Order' is erroneous, in so far as it is prejudicial to the interest of revenue." The assessee filed its explanation. The ld. Pr. CIT, after considering the explanation given by the assessee to the show cause notice, rejected the same and passed an order u/s. 263 of the Act on 27/03/2019 revising the order passed u/s. 143(3) r.w.s. 263 of the Act, dt. 26/12/2016. Para 8 of this order read as follows:- "8. In my considered opinion this is a case of lack of enquiry on the part of the AO. Not collecting the full facts and not taking enquiry to logical end which could enable the AO decision based on the totality of facts makes this order erroneous in so far as it is prejudicial to the interest of ....
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..... Pr. CIT-4, Kolkata. He submitted that, the order passed by the Assessing Officer on 26/12/2016 was a speaking order wherein, the Assessing Officer has followed the direction of the ld. Pr. CIT. In the impugned revisionary order, Ld. PCIT has pointed out certain alleged infirmities in the order of the A.O. which according to the ld. Pr. CIT made the order of the A.O. "erroneous" and "prejudicial" to the interest of the revenue. On the second impugned revisionary order passed u/s. 263 of the Act, the ld. Counsel for the assessee submitted the following point to point rebuttal:- (i) A.O. had failed to examine the net worth of shareholders in order to see the justifiability of such huge investment. It was submitted that, the A.O. has already given a finding in the assessment order that he had verified the source of fund, identity, genuineness and credit worthiness and found the same in order. Further, from the chart marked as Annexure: 'B', it is apparent that the investment made in the appellant company by the shareholder company is not more than 3.5% of their net worth of each shareholder company. (ii) Quantum of share premium raised by the appellant has not been exa....
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.... source of source. Thus, it is apparent that source of share application received by the appellant has been traced to the shareholders whose identity, genuinity and credit worthiness has admittedly been examine by the A.O. (vi) The order passed by the A.O. suffers from lack of adequate enquiry making it erroneous insofar as it is prejudicial to the interest of the revenue. It was submitted that the A.O. was obliged to follow the direction of the Ld. PCIT, which he followed strictly and completely." 4. The ld. Counsel for the assessee summed-up his arguments that, ld. Pr. CIT's order u/s. 263 of the Act, dt. 27/03/2019, is bad law for the following reasons:- a) The Assessing Officer had examined the net worth of the shareholders and had given a finding of facts, in his assessment order about the source of funds, identity, creditworthiness of the share applicant. He filed a paper book wherein at annexure-B, the details and documentation submitted by each of the share applicant companies are enclosed. That the Assessing Officer was not required to examine the justification of the share premium charged as per the directions of the ld. Pr. CIT, in the first revisionary order ....
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.... of Income-tax in ITA No. 838/Kol/2019; Assessment Year: 2012-13 order dt. 12.08.2020 and the decision of the Kolkata 'A' Bench of the Tribunal in the case M/s. Omkar Infracon Private vs ITO, Ward-12(2), Kolkata in ITA No. 896/Kol/2019; Assessment Year 2012-13, order dt. 18/03/2020, wherein under similar circumstances the order of the ld. Pr. CIT u/s. 263 of the Act, was quashed as bad in law. He further relied on the decision in the case of Kanchan Plywood Products Pvt. Ltd. in ITA No. 2411/Kol/2017; Assessment Year: 2012-13, order dt. 01/05/2019, and other decisions for the proposition that share premium cannot be taxed, even if it exceeds the fair market value, prior to the amendment brought to the Income Tax Act in the Assessment Year 2013-14. We would be considering each of these decisions as and when necessary. 5. The ld. D/R, Shri Anand Kedia, on the other hand, controverted the arguments of the assessee and submitted that the ld. Pr. CIT in the impugned order passed u/s. 263 of the Act on 27/03/2019 has dealt with each and every argument made by the assessee. He took this Bench through para 5.2 to para 8 of the impugned order passed u/s. 263 of the Act and relied o....
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....law, which we will be referring to, as and when required. 5.1.1. He once again relied on the order of the Co-ordinate Bench of the Tribunal in the case of Amritrashi Infra Private Ltd. vs. Principal Commissioner of Income-tax (supra) and submitted that the facts of the assessee's case are identical to the facts in the case of Amritrashi Infra Private Ltd. (supra) and under those circumstances, the decision of the Tribunal in the case of Amritrashi Infra Private Ltd. (supra), has to be followed, specifically when no contrary decision is brought to the notice of the Tribunal. 6. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 7. We find that this Bench of the Tribunal, has under identical circumstances and identical facts, in the case of Amritrashi Infra Private Ltd. (supra) where the ld. Pr. CIT had passed a second order u/s. 263 of the Act, held as follows:- "46. In the light of the aforecited judicial precedents, let us examine the case in hand and find out whether pursuant to the specific direction of First....
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....ped to the conclusion that the share capital collected by assessee as unexplained cash credit u/s. 68 of the Act. Therefore, according to the First Ld. Pr. CIT, the first original assessment order framed u/s. 143(3) of the Act dated 26-03-2015 was against the principle of natural justice and, therefore, he found it fit to order denovo assessment and gave specific direction in respect of share capital & premium collected by assessee. 48. Thereafter, the ld. Pr. CIT was pleased to direct "...............assessment order passed on 26.03.2015 is set aside de novo with the direction to the AO to carry out proper examination of books of account and bank statement of the assessee as well as the investor. The AO is also directed to examine the source of share application, entity of investor and its genuineness". (emphasis given by us). He also directed that the assessment proceedings to be initiated at the earliest and to be completed without waiting for time bar limit. With the aforesaid specific direction, the First Ld. Pr. CIT has set aside the first original assessment order dated 26-03-2015. 49. So we note that the second AO was specifically directed by the First Ld. Pr. CIT to ca....
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.... activity, (vi) details of increase in share capital, (vii) Form 2, (viii) Form 5, (ix) bank statements evidencing payment through banking transaction, which fact the AO has acknowledged in the reassessment order. [And here we should keep in mind that the First Ld. Pr. CIT's finding of fact after perusal of original assessment records that assessee in the first round before AO has produced PAN, ROC details, audited financial statements, details and copy of share applicants, bank statements reflecting the transaction, records relating to investors to establish identity, creditworthiness & genuineness. And the finding of First Ld. Pr. CIT that assessee had discharged its onus by furnishing/documents before the AO.]Secondly, after examining these documents, we also find that the second AO issued notices u/s. 133(6) of the Act to all the thirteen (13) share applicants and pursuant to the notice, all the shareholders have filed their respective (i) PAN details, (ii) CIN detail, (iii) Audited Annual Report for FY 2011-12 (AY 2012-13), (iv) ITR acknowledgment for AY 2012-13 which the AO acknowledges that he verified the same and thus we note that the identity of the investors were dul....
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.... by the Second Ld. Pr CIT and it is not the fault for which the Ld. Pr CIT exercised his power u/s. 263 of the Act. Thus, we note that second AO issued sec. 133(6) notice and collected documents running more than 352 pages. Moreover, the First Ld. Pr. CIT while setting aside the first AO's order has returned a finding that assessee in the first round itself has filed the relevant documents to prove the identity, creditworthiness and genuineness of the share capital and that assessee had discharged its onus by filing the same. So we find that during the second round, the AO issued notices to share-holders u/s. 133(6) and after perusing their replies and supporting documents and thereafter having verified their veracity, the second AO was satisfied with the explanation of assessee in respect to the nature and source of share capital which view of second AO cannot be faulted. And we also note that all the share-holders are regular income tax assessee's. Therefore in the light of the aforesaid documents discussed their identity cannot be disbelieved and the AO's satisfaction in respect of identity of the shareholders is a possible view and cannot be termed as unsustainable ....
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....equired as per law in force for AY 2012-13), bank statement, audited balance sheet etc except M/s. Maharaja and M/s. Sristi Sales. Thus the assessee had discharged the onus on it about the creditworthiness of the share- holders. So we note that the source of the investments has been clearly brought to the notice of the second AO during the assessment/reassessment proceedings. Further, the bank statements of all the shareholders as well as that of assessee were filed before the AO, which revealed that the share capital and premium have been subscribed by them through banking channel (NEFT or cheque) which goes on to show that the assessee has discharged the onus in respect of genuineness of the transaction. Based on the documents and materials called for by the AO who accepted the same after verification is an act of enquiry. And we note that revenue has not brought on record any material to challenge the veracity of the documents referred to above. Moreover, the second Ld. Pr. CIT in his impugned order has not brought any material to rebut the presumption of second AO to justify his intervention u/s. 263 of the Act and which would have upset the decision of the second AO's fact....
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....sessee's company and Share Application Form, Bank statement, ITR acknowledgement, and explanation of source of fund as well as financial statement available in the PB-page 39 to 77. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements and thus we note that the assessee had duly discharged its onus to prove the identity of the share applicant by adducing PAN as well as income-tax returns. The financial statement shows that the share applicants had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Further, it is noted that the share applicant had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (iii) We note from a perusal of the paper book-2 pages 78 to 111, the details of share applicant M/s. Ambala Trafin Pvt. Ltd. It is a Private Limited Company which has a PAN AACCA1184G and its CIN number is U67120WB1995PTCO74397 and the Net worth of this company as on 31.3.2012 Rs. 62,47,11,003- (PB-page 101) and investme....
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....any and the transaction has happened through banking channel. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (v) We note from a perusal of the paper book-2, pages 138 to 159 the details of share applicant M/s. Shivarshi Construction Pvt. Ltd. It is a Private Limited Company which has a PAN AAQCS7848M and its CIN number is U45400WB2011PTC170957 and the net worth of this company as on 31.3.2012 Rs. 53,89,95,046/- (PB-page 153) and investment made in the assessee company is to the tune of Rs. 4,66,00,000/- and this share applicant has made the transaction through banking channel on 29.03.2012 Rs. 4,66,00,000/- through Cheque. There is board resolution for investment in assessee's company and Share Application Form Bank statement, ITR acknowledgement, explanation of source of fund as well as financial statement available in the PB-page 139 to 159 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. This ....
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....td. It is a Private Limited Company which has a PAN AABCF9036D and its CIN number is U52190WB2012PTC 173352 and the net worth of this company as on 31.3.2012 Rs. 15,38,94,946/- (PB-page 200) and investment made in the assessee company is to the tune of Rs. 4,49,00,000/- and this share applicant has made the transaction through banking channel on 30.03.2012 Rs. 4,49,00,000/- through Cheque.. There is board resolution for investment in assessee's company and Share Application Form, Bank statement, ITR acknowledgement, explanation of source of fund as well as financial statement available in the PB-page 186 to 206 n the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statements and thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Further, it is noted that the....
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....financial statement available in the PB-page 228 to 261 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (x) We note from a perusal of the paper book-2, pages 262 to 283 the details of share applicant M/s. Labhdhan Impext Pvt. Ltd. It is a Private Limited Company which has a PAN AACCL2111J and its CIN number is U51909WB2011PTC171524 and the net worth of this company as on 31.3.2012 R....
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....that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (xii) We note from a perusal of the paper book-2, pages 304 to 326 the details of share applicant M/s. Maharaja Merchants Pvt. Ltd. It is a Private Limited Company which has a PAN AAECM224E and its CIN number is U51109WB2005PTC102343 and the net worth of this company as on 31.3.2012 Rs. 1,54,58,399/- (page 313 of P.B-2)and investment made in the assessee company is to the tune of Rs. 50 lakhs and this share applicant has made the transaction through banking channel on 28.02.2012 a sum of Rs. 50 lakhs through Cheque. There is Share Application Form, Bank statement, ITR acknowledgement, financial statement available in the PB-page 304 to 326 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Furthe....
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..... CIT has not found fault with the action of the second AO in giving effect to the specific directions given by him while passing the first revisional order on 23.08.2016. Thus, we note that when the second AO while framing the reassessment order pursuant to the specific direction of the First Ld. Pr. CIT's order dated 23.08.2016 (first revisional order) has complied with the specific directions of the First Ld. Pr. CIT and based on the inquiry conducted and after perusal of the documents running more than 352 pages which reveals the identity, creditworthiness and genuineness of the share capital and premium collected by the assessee from the share subscribers, the satisfaction of AO as envisaged in sec. 68 of the Act is a plausible view and the fact that the share subscribers responded to sec. 133(6) notice and produced all documents along with the audited financial statements and other documents referred supra, the assessee had discharged the onus upon it about the identity creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. Since the aforesaid exercise was carried out by the second AO in the reass....
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....ness or genuineness of the share subscribers and thus recorded a finding of fact that the decision of AO's enquiry was faulted or wrong and in that process tried to show that it has resulted in a view which is "unsustainable in law" which would have justified his action of passing the impugned order u/s. 263 of the Act, which unfortunately is not the case. Since the AO's view on the facts collected and discussed is definitely a possible view, so in the factual background discussed in detail, we are of the considered opinion that Ld. second Pr. CIT ought not to have interfered with the AO's reassessment order which in any case can be classified as 'unsustainable in law' since it is in line with plethora of judicial decisions of the subject. 56. To sum up, we find from the above said facts that the Second AO has conducted enquiry as directed by the First Ld. Pr. CIT on the specific subject matter i.e. share capital and premium collected by the assessee-company. Therefore, the finding of Second Pr. CIT that the Second AO has not conducted enquiry is incorrect and is flowing from suspicion only. And as discussed, the allegation/fault pointed out by the Second Ld. ....
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....tor as well as an adjudicator. Looking from another angle of doctrine of merger canvassed before us, we note from the facts of this case that the second Ld. Pr. CIT - 4 by passing the second revisional order dated 14.03.2019 has substituted the First Pr. CIT's order passed u/s. 263 of the Act dated 23.08.2016 with his own order which he cannot do since the second assessment order/re-assessment of the Second AO dated 07.12.2016 was pursuant to the first revisional order of the First Ld. Pr. CIT and on the very same subject matter on which specific directions/instructions were given by the First Ld. Pr. CIT, which direction since having been complied by the AO, brings into operation the doctrine of merger the subject matter i.e. share capital & premium collected by assessee company. Resultantly the second Ld. Pr. CIT, again cannot rake-up the same subject matter without the second Ld. Pr. CIT in the second revisional order spells out where the error happened to second AO as an investigator or adjudicator, which exercise the Second Ld. Pr. CIT has not done, so the second Ld. Pr. CIT cannot be permitted to again ask the AO to start the investigation in the way he thinks it proper o....
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....and did not had taken notice of the important fact that these were the promoters who started the company in the year 2010 for the business of making ash-fly bricks and the only new shareholder individual was father of an existing director; and the assessee company in this assessment year had started expansion activities of the business of making/manufacturing fly ash bricks. We note that the share capital infused into the company has yielded result. And moreover the investor companies were group companies and shares allotted this year was to existing shareholders and only new shareholders was the father of a director. As stated earlier, the promoter and group companies found potential of growth in the business and had made the investment and premium which was agreed upon mutually by all the existing shareholders taking into consideration the expansion and future return expected of it. After appreciating these facts and taking into consideration the financial results of the assessee company as on the date of reassessment order, the AO had accepted the genuinity of the transaction, so nothing turns around in respect of this fault raised by the Ld. Pr. CIT. (c) The next fault found ....
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.... that the earlier years of assessment have not been reopened though there was sufficient time for the same. In the light of the documents discussed supra, we are of the opinion that assessee has discharged the onus on it. (g) The last fault taken note by the Ld. Pr. CIT is that the reassessment order prima facie suffers from independent and adequate enquiry. We do not countenance this allegation of the Ld. Pr. CIT. We have already discussed in detail about how the AO has called the individual share holders and the directors of the corporate shareholders and recorded their statements and gone through the voluminous documents filed by the assessee. Thus, the shareholders had discharged the onus on it to prove the identity, creditworthiness and genuinity of the share transaction who are none other than the promoters, directors and group companies and the AO after examining and satisfying himself about the share capital and premium has accepted it. Thus it is noted that independent and adequate enquiry was made and further it is not pointed out by Ld. Pr. CIT as to what further enquiry was needed or how the enquiry made by AO is wrong, without which in the facts of the case as disc....
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....ssessee had discharged the onus on it about the identity, creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. Since the aforesaid exercise was carried out by the AO in the original as well as reassessment proceedings and the documents are in the assessment folder and the statements have been recorded of the individual share subscribers and directors of the Group company share subscribers, the Ld. Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue unless the Ld. Pr. CIT based on an enquiry conducted by himself in the second round atleast is able to upset the AO's satisfaction in respect of identity, creditworthiness and genuineness of the share subscribers and his decision not to make any addition under section 68 of the Act. In the light of the aforesaid discussions and on perusal of the documents, we are of the view that AO's view to accept the identity, creditworthiness and genuineness of the share capital and premium collected from the share subscribers as....
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....so held by the ITAT Kolkata Bench in the following cases:- 1) M/s. Omkar Infracon (P) Ltd. vs. ITO in ITA No. 896/Kol/2019, Assessment Year: 2012-13, order dt. 18/03/2020 2) Amritrashi Infra Private Ltd. vs. Pr. CIT in ITA No. 838/Kol/2019, Assessment Year: 2012-13, order dt. 12/08/2020 9.2. Persons representing the share applicant companies have appeared before the Assessing Officer in the second round of assessment proceedings, in response to notice u/s. 131 of the Act, and their statements were recorded on oath. The share applicant companies have also responded to notice u/s. 133(6) of the Act by furnishing the information called for. The information filed by the creditor share applicant companies are as follows:- 1) Copy of I.T. Return/Acknowledgment 2) Copy of annual audited accounts 3) Balance sheet and profit & loss a/c statement 4) Copy of Bank Statement These documents prove the genuineness of the transactions. 9.3. A perusal of these documents show that the Assessing Officer has followed the directions of the ld. Pr. CIT, issued in his first order dt. 26/12/2016 passed u/s. 263 of the Act and has taken a plausible view. It is not a case of lack of enquiry, ....
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....IT (1973) 88 ITR 323 (SC)". 25. In Max India Ltd. (3 Supra), reiterated the view in Malabar Industrial Co. Ltd. (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 were two views on the....
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....nce 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 could not have objected to th....
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.... 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. 30. In Rampyari Devi Saraogi(21 Supra), the Commissioner i....
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....ust 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 with a view to start fishing and roving inquiries in matters or orders which are already concl....
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....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 failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not b....
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....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. COMMISSIONER OF INCOME TAX vs. J. L. MORRISON (INDIA) LTD. 366 ITR 593 As regard the submission on behalf of the Revenue that power unde....
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....en 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; Hindustan 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 could be taken, were not enough to say that the order of the AO was erroneous or prejudicial to the interest of the Revenue. The jurisdiction could be....