TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 922
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....ces issued by the Pr. CIT, whereas the notice u/s 263 was based on the information as per the audit objection which the Pr. CIT having alleged that the order passed by the AO was erroneous and prejudicial to the interest of the revenue. 4. That the revision order passed u/s 263 pursuant to the amendment made w.e.f. 1st June 2015 is bad in law. 5. That the Pr. CIT grossly erred in law in holding that the order passed by the Assessing Officer was very casual and passed in a hurried manner did not examine all the material facts of the case and was erroneous and prejudicial to the interest of revenue. 6. That the order passed u/s 263 without giving a proper opportunity to the assessee and have not appreciated the issues which were explained on the various items identified by the Pr. CIT in his order is bad in law and prayed to be quashed. 7. the each grounds is dependent of and without prejudice to the other grounds raised herein 2. The registry has informed that the present appeal is delayed by 37 days. Ld. Counsel for the assessee submitted that the delay in filing the appeal is due to country-wide lockdowns imposed by the government in wake of Covid-19 outbreak. Taking cogn....
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....added back to the assessee's income which was not done by the AO. The omissions resulted in under assessment of income to that extent resulted in notional tax effect of Rs. 52,77,406/-. Keeping in view of the above, the assessment order passed by the Assessing Officer is considered to be erroneous is so far as it is prejudicial to the interest of revenue, and therefore, I, propose to invoke powers vested u/s 263 of the Income Tax Act, 1961 in respect of the order referred to above. You are hereby given an opportunity of being heard as per section 263(1) of the Income Tax Act to present yourself in person or through an authorized representative on 28.01.2020 at 11:30 AM to explain your case. In case no reply is received by stipulated date, it will be presumed that you have nothing to say in the mater and a decision will be taken on the basis of material available in this office. 5. Now the assessee is in appeal before the Tribunal challenging the jurisdiction of Ld. PCIT assumed u/s 263 of the Act. 6. Ld. Counsel for the assessee apart from placing reliance on written submissions placed on record and relevant extract reproduced in the subsequent paras and also submitted that pro....
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....d year when the excess provision made for bad and doubtful debts on ICD was written back, the same was deducted from the net profit as per the audited financial statements while computing income under the head 'Profits and Gains from Business or Profession'. It is a fact on record that during the impugned year, assessee was engaged in the process of recovery of loans and interest which were granted earlier. No fresh lending was done. Before the Ld. Pr. CIT all the documentary evidences were placed on record. [PB 22 and 41] 5. The opening balance as on 01.04.2014 of ledger 'inter corporate deposits' is Rs. 156,89,42,845. Out of this, during the impugned year an amount of Rs. 14,75,00,000 was recovered from Som Distilleries Limited. This recovered amount has been reduced from net profit while computing the income under the head 'profits and gains from business and profession' for the impugned year. There is no benefit claimed by the assessee in terms of section 41(1) in respect of the impugned amount. There is no 'tax advantage' derived by the assessee in respect of the impugned amount which is a balance sheet transaction.Extract of the relevant ledger account reproduced as under....
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....notional income and hence there cannot be notional tax. 11. Ld. Pr.CIT erred in stating that there was a notional tax effect of Rs. 52,77,406 making the order passed by Ld. AO erroneous and prejudicial to the interest of Revenue. 12. Ld. Pr.CIT has directed AO to decide the issue i.e. amount recovered out of the loss assets, on merits and as per law. No specific finding on merits has been given by Ld. Pr.CIT on examination of written submissions and all the documentary evidences placed on record. No specific enquiry or investigation has been made by Ld. Pr.CIT to establish and show the error or mistake made by the assessing officer making the order unsustainable in law. Reliance is placed on the decision of Hon'ble Delhi High Court in the case of D G Housing Projects Ltd - [2012] 20 taxmann.com 587. [PB 148] B. Enquiry conducted by Ld. AO - no lack of enquiry and C. Application of the mind by Ld. AO 1. Assessee is a Government company in which 100% shareholding is of the Government of Madhya Pradesh. It is engaged in the business of financial assistance for Industrial Development and Infrastructure activity in the state of Madhya Pradesh. 2. The complete control and m....
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....onducted by Ld. AO. 8. The twin conditions required to invoke the provisions of section 263 i.e. order should be erroneous and also prejudicial to the interest of revenue are not satisfied. 9. Being erroneous always refers to 'being an error of law / jurisdiction' i.e. an incorrect application of law. An order passed by an Assessing Officer can be treated as erroneous if the view taken by the assessing officer is unsustainable in law. Thus, when a plausible view sustainable in law has been taken by assessing officer the order so passed cannot be treated as erroneous. In the instant case, Ld. AO has made the enquiries during the assessment proceedings on the issues raised by Ld. Pr.CIT in the proceedings u/s 263. Ld. AO has allowed the claim on being satisfied with the explanation given by the assessee. Thus, plausible view taken by the Ld. AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in this regard. 10. Without prejudice to the above and strictly in alternate, the assessee has unabsorbed brought forward loss of Rs. 127,77,68,266 which is available for set off. The tax liability on the addition, if any, made shall be ....
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....cluded withdrawal of provision of Inter Corporate Deposit (ICD) and provision of interest on ICD totalling to Rs. 15,04,64,954/-. We further observe that from the profit and loss account these amounts were credited and since they did not form part of income from business or profession the same were excluded for computation of income under the head income from business or profession. 9. We also observe that in the course of revisionary proceedings assessee had explained that the provision for bad and doubtful debts on ICD and interest thereon was made in the earlier years i.e. A.Y. 2002-03 to 2004-05 while computing the total income of these year. The amount of provision for bad and doubtful debts on ICD and interest was added back to the net profit in the Profit and loss account and is evident from the documentary evidences placed on record in the paper book which is summarized in the table below: Sr. No. Particulars Amount (Rs.) Amount (Rs.) 1 Net profit as per audited financial statements (85,69,05,758) 2 Add: Provision of bad debts - Term Loan 1,60,70,000 Provision of bad debts - ICD 15,35,66,255 Depreciation as per bo....
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....always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or] Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance wit....
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....learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. 13. It is well settled law that for invoking the provisions of section 263 of the Act both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon'ble Courts. 14. Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. - [2000] 243 ITR 83 - order pronounced on 10.02.2000 - HEAD NOTE - "Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1983- 84 - Whether in order to invoke section 263 Assessing Officer's order must be erroneous and also prejudicial to revenue and if one of them is absent, i.e., if order of Income-tax Officer is erroneous but is not prejudicial to revenue or if it is not erroneous but is prejudicial to revenue, recourse cannot be had to section 263(1) - Held, yes - Whether if due to an erroneous order of ITO, revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to interests of revenue - Held, yes - Assessee-company entered into agr....
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....ssessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view with which the Commissioner of Income-tax does not agree. If cannot be treated as erroneous order, unless the view taken by the Assessing Officer is unsustainable under law . (vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the Commissioner of Income-tax, while exercising his power under section 263 is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. (vii) The Assessing Officer exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the Commissioner of Income-tax does not feel satisfied with the conclusion. (viii) The Commissioner of Income-tax, before exercising his jurisdiction under section 263 must have material on record to arrive at a satisfaction. (ix) If the Assessing Officer has made enquiries d....