TaxTMI 
TaxTMI 
2021 (12) TMI 635
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....e bad in law and on facts of the case for want of jurisdiction and for various other reasons and hence the same may kindly be quashed. 2. That the ld. Pr. CIT-2 Jaipur is grossly erred in law as well as on the facts of the case in invoking S. u/s 263 of the Act. The same is being purely contrary to the provisions of law, therefore the impugned order u/s 263 as well as notice u/s 263 of the Act may kindly be quashed. 3. That the ld. Pr. CIT Udaipur is grossly erred in law as well as on the facts of the case in taking the action u/s 263 of the Act on the allegations that: (a). The assessee Co-operative Society had received interest of Rs. 14,05,465/- from FDRs with Co-operative banks which are not Co-operative Society, therefore the deduction of Rs. 1,08,464/- claimed u/s 80P(2)(d) is not allowable. Which are contrary to the facts and such a finding being perverse, the impugned action is bad in law without jurisdiction and being void ab initio, the impugned order u/s 263 may kindly be quashed. 4. The appellant prays your honors indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing." 5....
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....imed by the assessee is allowed vide page 2 of the assessment order. Further the Assessing Officer has also asked about expenditures debited in the P&L account in response to the assessee also filed the reply. The Assessing Officer has disallowed the expenditure of Rs. 2,86,918/- on account of provisions and audit fees and computed the income of the assessee at Rs. 3,95,382/- as against Rs. 1,08,464/- and after deduction u/s 80P(2)(a)(i) and 80P(2)(a)(iv) at nil and completed the assessment at Rs. Nil vide assessment order u/s 148 rws 143(3) dt. 30.06.2017. 6. Thereafter the ld. Pr. CIT has issued the notice u/s 263 on dt. 25.03.2021 by alleging that the order passed by the AO is found to be erroneous as it is prejudicial to the interest of the revenue on the issue vide notice dt. 25.03.2021(PB22-23). In this notice the ld. Pr. CIT has alleged that: Deduction of interest income of Rs. 1,08,464/- has been claimed u/s 80P(2)(d). Besides, interest of Rs. 14,05,446/- on FDR received from Sikar Central Co-operative Bank, PNB, RGB and SBI has been claimed and the same was allowed by the AO, which is not allowable u/s 80P(2)(d) of the IT act. Hence the order dt. 30.06.2017 may....
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.... without application of mind, the action u/s 263 and consequent order is illegal, invalid void abinitio and liable to be quashed on this ground alone. 1.2. Further in the ld. PR. CIT in para-4 page 2 has stated that "a show cause notice u/s 263 was issued to the assessee vide this office letter No. ITBA/REV/F/REV1/2020-21/1031524300(1)DT.16.03.2021" It is absolutely incorrect and wrong. Because the show cause notice u/s 263 was issued to the assessee vide letter No. ITBA/REV/F/REV1/2020-21/10331748388(1) dt. 25.03.2021. Copy of notice is enclosed (PB22-23), which was received by email on 25.03.2021 at 1.52PM vide letter of the assessee (PB24) and assessee has objected the same. The hearing was kept just next day i.e on 26.03.2021. If the ld. Pr. CIT himself not applied his mind while passing the order u/s 263, then how he can blame or say that the ld. AO has not applied his mind while passing the assessment order. Hence also the action u/s 263 and consequent order is illegal, invalid void ab-initio and liable to be quashed on this ground alone. 2.1 Action of the Pr. CIT is invalid and without jurisdiction: It is submitted the action and direction of the ld. Pr. CI....
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.... to the tune of Rs. 50,55,800/- chargeable to tax has escaped assessment u/s 147/148.". Vide copy of reasons recorded (PB1). 2.3 Thereafter the ld. AO has issued the detailed query letter to the assessee u/s 142(1) and asked to the assessee to produce the (i) detailed note on all the source of income(ii) details all the bank accounts(iii) details of cash deposits in the bank account(iv)cash book and bank Book (v) relevant books of accounts for verification. In response thereto the assessee has furnished all the details admittedly vide replies to AO (PB3-11) with the details. Also vide page 1-2 of the assessment order wherein he has stated that " A/R attended the proceedings from time to time and submitted the details/information, the details furnished were examined and case was discussed time to time, after examination of books of accounts and vouchers on test check basis claim for deduction as stated above is found correct. Accordingly, deduction claimed by the assessee is allowed. Thus during the course of assessment proceedings the AO verified the cash deposits and claim u/s 80P, bank book and other books of accounts on test check basis. And the AO did examine all these....
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....ourse of proceedings u/s 263, society had claimed that interest earned by it was from Sikar kendriya Sahakari Bank Ltd, which is registered as a Co-operative Society certificate is enclosed, but assessee has not submitted any details of interest earned form it or any other bank. Therefore the facts of the Society could not be verified in absence of proper documents which have not been filed during the assessment proceedings or during the proceedings u/s 263. Here we want to say that one side the Pr. CIT has admitted that the Assessee Co-operative society had received interest of Rs. 14,05,464/- from FDR's from Sikar kendriya Sahakari Bank Ltd, which is registered as a Co-operative Society certificate is enclosed. Just after he has stated that no details of interest is filed. Also vide our reply to Pr. CIT(PB26). Also vide PB 15 & 17 of Income and expenditure A/c. 2.7 Thus he has not looked merit of the case in their true perspective and sense and not applied his mind on the same despite available before him. He was only of the view that the AO has not made proper & detailed i.e deep inquiry on the issue. He has only stated that the order of the AO is erroneous and prejudic....
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....n of income was filled by the assessee for the year. Therefore I have reason believe that amount deposited in the saving Bank account to the tune of Rs. 50,55,800/- chargeable to tax has escaped assessment u/s 147/148.". Vide copy of reasons recorded (PB1). If so then how the ld. Pr. CIT can assume the jurisdiction on the issue other then reasons recorded u/s 148 in this preposition we would like to draw your kind attention to the latest decision of this Honble Bench in the In the case of Mahendra Singh Dhankhar HUF vs. ACIT ITA No. 265/JP/2020 Jun 30, 2021 (2021) 62 CCH 0271 JaipurTrib where It has been held that "Revision-Ordering revision where case is selected for limited scrutiny-Assessee firm is a real estate firm engaged in colonizing and developing residential projects-Case of assessee was selected for limited scrutiny through CASS on account of mismatch of AIR and CIB data, and mismatch in sale turnover reported in audit report and ITR-An addition for wrong calculation of LTCG was made by A.O. which was not challenged by assessee-Subsequently, on basis of certain audit objections, PCIT issued notice u/s 263-Assessee submitted that it is a case outside jurisdiction....
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....rder passed by PCIT u/s 263 is set aside-Assessee's appeal allowed." In the case of Paul Bharwaj vs. Pr.CIT in ITA No. 463/Chd/2019 May 13, 2021 (2021) 62 CCH 0120 Chd Trib Revision-Order erroneous or prejudicial to revenue-Over exercise of power-Assessee an individual filed his return declaring income and agricultural income-Case was selected for limited scrutiny for reason that there was a substantial increase in capital during year relevant to assessment year under consideration-AO accepted return filed by assessee-Pr. CIT issued notice to assessee u/s 263 and directed AO to make assessment afresh on issues mentioned in notice-Held, Tribunal in case of M/s Su-Raj Diamond Dealers Pvt. Ltd. CIT ITA No 3098/ Mum has quashed order passed u/s 263 in case of limited scrutiny assessment, holding that Pr. CIT under garb of section 263, cannot exceed his jurisdiction holding that when case of assessee was selected for limited scrutiny for reasons viz. (i) Large other expenses claimed in P&L A/c; and (ii) Low income in comparison to High Loans/advance /Investment in shares, therefore, no infirmity could be attributed to assessment framed by A.O on ground that he had failed to dea....
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.... reply on 26.03.2021 by stating that" With reference to above notice, we want to convey that today is Bharat Band/ Chakajham. The notice of revision proceedings was received on mail dated 25.03.2021 at 1.32 pm and provides very short period of time for submission of any reference documents and justification regarding on points raised in revision proceedings. (PB24) As possible as the time is being so short and the assessee has to engaged the counsel and to collect the papers from the earlier counsel and also required the time to prepare the matter with the counsel. However the ld. Pr.CIT has after receiving the reply has not issued any further show cause notice for the allegations which he made in the impugned order and decided the matter, without giving further opportunity of being heard. And passed the order on 31.03.2021. It is the violation of the principal of natural justice Recently in the case of Jaidurga Minerals v/s Pr. CIT 200 DTR 205(Ctk)(Trb.) in ITA No. 276/Ctk/2015 dt. 10.08.2020 it has been held that " right to fair hearing is a guaranteed right to an assessee and granting of effective opportunity is a sine qua non in Sec. 263 for unsetting a statut....
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....t proceedings. What is required is that the AO should frame the assessment in accordance with the provisions of the Act, as interpreted and in the light of the relevant judicial pronouncements, as available on the date of framing the assessment or material available before him. The AO being a quasi-judicial authority can also take support from one set of the decisions, if there, in case is a diversions of opinion. He can't be directed to make an assessment in a particular manner, as specifically prohibited by S. 119. Kindly refer recent judgment of Jodhpur Bench in the case of Ritesh Suhalka V/s Pr. CIT Udaipur in ITA No. 383/Jodh/2019 dt. 21.12.2020. On same plea 5.2. We also would like to draw on the observation and finding In the case of Dorabji Tata Trust vs. DCIT (EXEMPTION) ITA No. 3909/Mum/2019 28th December, 2020 (2021) 209 TTJ 0409 (Mumbai) delivered by the honble President and vice president as under: "20. Undoubtedly, the expression used in Explanation 2 to Section 263 is "when Commissioner is of the view," but that does not mean that the view so formed by the Commissioner is not subject to any judicial scrutiny or that such a view being formed....
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....lly follows is that unless the Assessing Officer does not conduct, at the stage of passing the order which is subjected to revision proceedings, inquiries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant- that an Assessing Officer is expected to be, Commissioner cannot legitimately form the view that "the order is passed without making inquiries or verification which should have been made". The true test for finding out whether Explanation 2(a) has been rightly invoked or not is, therefore, not simply existence of the view, as professed by the Commissioner, about the lack of necessary inquiries and verifications, but an objective finding that the Assessing Officer has not conducted, at the stage of passing the order which is subjected to revision proceedings, inquiries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant that the Assessing Officer is expected to be. 21. That brings us to our next question, and that is what a prudent, judicious, and responsible Assessing Officer is to do in the course of his assess....
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....that there is something wrong. He is a watch-dog, but not a bloodhound.". Of course, an Assessing Officer cannot remain passive on the facts which, in his fair opinion, need to be probed further, but then an Assessing Officer, unless he has specific reasons to do so after a look at the details, is not required to prove to the hilt everything coming to his notice in the course of the assessment proceedings. When the facts as emerging out of the scrutiny are apparently in order, and no further inquiry is warranted in his bonafide opinion, he need not conduct further inquiries just because it is lawful to make further inquiries in the matter. A degree of reasonable faith in the assessee and not doubting everything coming to the Assessing Officer's notice in the assessment proceedings cannot be said to be lacking bonafide, and as long as the path adopted by the Assessing Officer is taken bonafide and he has adopted a course permissible in law, he cannot be faulted- which is a sine qua non for invoking the powers under section 263. In the case of Malabar Industrial Co Ltd Vs CIT [(2000) 243 ITR 83 (SC)], Hon'ble Supreme Court has held that "Every loss of revenue as a consequence of an o....
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.... CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. The above are also applicable in the present case. In case of Chorma Business Ltd v/s DPR. CIT 82 TTJ 540(Cal) it has been held that "AO before making the assessment, having called for details and having discussed the matter with the A/R of the assessee, such an order cannot be called erroneous and prejudicial to the interest of the Revenue only because the AO made a brief assessment order without discussing such details therein. Further, the Pr. CIT also did not give any finding as to whether the share transaction loss claimed by the assessee was bogus or not genuine but merely stated that the transaction could have been verified by the contract notes from the brokers, challan etc. Revision order of the PR. CIT Set Aside. Also refer Subrata Kumar Nag v/s PR. CIT 127 TTJ 238(Kol), Rajiv Arora v/s PR. CIT (Supra). We would like to refer the case of Kartik Financial Services Ltd V/s CIT 55 CCH170 (Mum. Tribunal)(2019). The principal of the case is also applicable here in the present case. In the case....
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.... jurisdiction-Premise for invoking revisional jurisdiction on the ground that the Assessing Authority made insufficient enquiry or improper enquiry and failed to verify closing stocks in record of assessee, before passing assessment order, falls flat by a bare perusal of assessment order itself-Thus, Tribunal was justified in holding that Commissioner was in error in invoking revisional jurisdiction u/s 263-Mere alleged insufficiency of enquiry in opinion of Commissioner by Assessing Authority, could not permit him to invoke revisional jurisdiction u/s 263-Therefore, essential twin conditions for invoking revisional jurisdiction, were not satisfied. In the case of V.B. Construction (P) Ltd. vs. CIT (2009) 28 CCH 0434 KolTrib held that Revision-Erroneous and prejudicial order-Lack of proper enquiry-There was a time of two years for investigation, the AO had issued questionnaire, the assessee had produced books of account, bills, etc. and replied to various issues raised by AO-Thus, it could not be said that order was passed in haste without making any inquiry on the issues-AO had taken one view where two views are plausible and such view cannot make the order erroneous and ....
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....sired to furnish affidavits of unsecured loans and details of interest paid. The AO again required the assessee to furnish the details of partners capital accounts and also to produce voucher for expenses and the matter was adjourned. After that, assessment was completed by passing assessment order. These matters clearly indicate that the AO particularly made reference to the matters, which the CIT has opined were not inquired. Thus, according to the Tribunal, the foundation to exercise power under s. 263 was not existing. In the aforesaid circumstances on the finding reached by the AO, no question of law really arises for consideration in this appeal. From the record of the proceedings, no presumption can be drawn that the AO had not applied its mind to the various aspects of the matter. In such circumstances, without even prima facie laying foundation for holding that assessment order is erroneous and prejudicial to interest in any matter merely on spacious ground that the AO was required to make an enquiry, cannot be held to satisfy the test of existing necessary condition for invoking jurisdiction under s. 263. When enquiry in fact has been conducted and the AO has reached a pa....
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....mmitted by the Assessing Officer and it is only when an order is erroneous, that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice for the requirement or order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interest of the revenue and if the Assessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view under with which the PR. CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the Assessing Officer is unsustainable under the 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 determines the income, the PR. CIT, 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 Assessin....
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....the learned PR. CIT. The reliance is placed upon the decision of Hon'ble Delhi High Court in the case of CIT v. Hindustan Marketing & Advertising Co. Ltd. [2010] 46 DTR (Del.) 109. The attention is drawn towards the decision of Hon'ble jurisdictional High Court in the case of PR. CIT v. Trustees Anupam Charitable Trust [1987] 65 CTR (Raj.) 30 : [1987] 167 ITR 129 (Raj.) Thus it is clear that Assessing Officer has made enquiry but sufficiency of enquiry can be depend upon from person to person. The AO cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. It is the duty of the AO to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an enquiry. The word 'erroneous' includes the failure to make enquiry. It is submitted that the AO made the enquiry and it is not a case of lack of enquiry. The Hon'ble Delhi High Court in the case of CIT v. Vikas Polymers [2010] 236 CTR (Del.) 476 had an occasion to consider the passing of order under s. 263 of the Act by the learned CIT when the AO made an enquiry and the assessee filed the reply. The Hon'ble Delhi High Court held th....
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....e fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were income-tax assessee and the unsecured loan taken from SC (P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee. Merely on the basis that the AO has not examined the cash credits of the partners or deposits from SC (P) Ltd., PR. CIT was not justified in invoking his suomotu powers, especially where the assessee had explained that the capital investment made by the partners, which had been called into question by the PR. CIT was duly reflected in the respective assessments of the partners and the unsecured loan taken from the SC (P) Ltd. was duly reflected in the assessment order of the said person." The reliance is also placed in the order of the Hon'ble High Court of Bombay in the case of PR. CIT v. Gabrial India Ltd. [1993] 71 TAXMAN 585 (BOM.). It will be useful to reproduce the held portion of the case: Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment....
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....serving that documents ought to have been laid before him and examined at time of assessment-Revisional jurisdiction available to Commissioner u/s 263 subject to condition that Order of AO was erroneous and prejudicial to interest of Revenue-Any exercise of revisional jurisdiction, bereft of such satisfaction was impermissible rendering resultant order void-No interference with impugned order of ITAT was warranted-Appeal dismissed In the case of Baberwad Shiksha Samiti v/s PR. CIT 134 DTR 65(Jp) It has been held that the AO accepted the returned income of the assessee. AO issued the query letter on both the issue which was replied by the assessee. Thus the AO made detailed enquiry and no adverse inference has been drawn by him. Hence the order u/s 263 is not sustainable. In the case of Shree Salasar Overseas (P) Ltd. vs. PR. CIT (2012) 144 TTJ 0041 (UO) held Revision-Erroneous and prejudicial order-Lack of proper enquiry- CIT set aside the assessment order on the ground that the AO has not verified as to whether the provision for development expenses claimed as deduction by the assessee-developer was made on scientific basis having regard to the accrued liability ....
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....profit. In this type of association people come forward as a group, pool their individual resources, utilize them in the best possible manner, and derive some common benefit out of it. To achieve primary objective it provides easy credit facilities to the local farmers, small and medium scale farmers and other laborers to help them and improve their financial condition. To seek its objective, the society may co-ordinate their activities with other societies and can also work as agent of them. The society is engaged in buying, collecting and distributing fodder for animals, fertilizers, insecticides, pesticides, agricultural implements and other important farm inputs. The society transacts in providing the facility of godowns (owned/rented) to store farm inputs and agriculture produce. Also provides the facility of milkshaalas, cowsheds, goat farming and pig farming. The Society is mainly dealing in control items such as seeds, fertilizer, pesticides and other agriculture products etc. whose prices are decided by government and selling the same to its members on pre-determined government prices to its members. The Society is mainly dealing in such other wo....
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..... The total interest received by the society on its investments of Rs. 14,05,465.00. The total interest received from Sikar Kendriya Sahakari Bank Ltd. Rs. 14,05,465.00. The Sikar Kendriya Sahakari Bank Ltd. is a co-operative society and certificate of co-operative society is enclosing herewith. The society is eligible to allow deduction u/s 80P(2)(d) as per above justification and same issue is also agree with decision of Honble Rajasthan High Court in case of CIT, Jaipur-II Vs. M/s Rajasthan Rajya Sahakari Kray Vikray Sangh Ltd under D.B. Income Tax Appeal's No.139/2002, 20/2004, 24/2004, 27/2004, 305/2005 & 59 / 2006. This Court in aforesaid case has observed as under: "1. All these appeals since involve identical substantial questions of law, therefore heard together & are being decided by this common judgment. 2. By way of these appeals, the department has assailed the judgment & order of the Income Tax Appellate Tribunal whereby tribunal has allowed the appeal of the assessee-company-Federal Society which is registered under the Cooperative Societies Act,1912. 2.1 The case of the department is that the assessee claimed benefit unde....
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....on 80P(2)(a) (iv) and allow the deduction acording to law. 7. The Id. A.R. Submits that the assessee has received interest from other Cooperative Societies/Banks and after deduction the interest paid to State Government on loan, the net amount of interest amounting to Rs. 58,84,711.46 was shown as interest income and claimed as deduction u/s 80P(2)(d). This deduction was disallowed by the AO on the ground that the4 interest income has not been earned out of any investment but the same is a result of running current account with various Cooperative Banks, which cannot be held to be the investment. The CTT(A) has also confirmed the disallowance. He further submits that the interest income has been earned from short-term deposits with Co-operative Banks and Cooperative Societies and is fully exempted u/s 80P(2) (d). The CTT(A), in the subsequent assessment year, i.e., assessment year 1993-94, has allowed the same. The reliance was also placed upon the judgement of Hon'ble Punjab & Haryana High Court in the case of CTT vs. Haryana State Co-operative Housing Society (1998) 234 ITR 714." 4. Counsel for the Department, Mr. Sanjay Jhanwar, has drawn our atten....
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.... are not referred to. As already stated, the marginal heading of S. 80P is "Deduction in respect of Income of Cooperative Societies." 10. In Commissioner of Income Tax vs. Haryana Cooperative Sugar Mills Ltd: (1989) 180 ITR 631 (P & H) in para no.8 which reads as under:- "8. For the reasons recorded above, we answer both the questions in favour of the assessee, in the affirmative and hold that the Tribunal was right in coming to the conclusion that short-term call deposits were investments within the meaning of Sec. 80P(2)(d) of the Act and qualified for deduction under that provisions for both the years in question. The parties are left to bear their own costs." 12. In Surat Vankar Sahakari Sangh Ltd. Vs. Assistant Commissioner of Income Tax: (2016) 72 taxmann.com 169 (Gujarat) in para no.8.1 & 8.2 which reads as under:- "8.1 Similarly, in the case of Doaba Cooperative Sugar Mills Ltd. (supra), the Punjab and Haryana High Court has held as under: '5. The contention of Mr. Gupta, learned counsel appearing for the Revenue, is that the Tribunal was wrong in allowing deduction under Sec. 80P(2)(d) of the Act because it is not establishe....
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....ved from the cooperative society from its investment in any other cooperative society. Therefore, we do not agree with the argument advanced by the learned counsel for the Revenue. In our opinion, the learned Tribunal was right in allowing deduction under Sec.80P(2)(d) of the Income Tax Act, 1961. In respect of interest of Rs. 4,00,919/- on account of interest received from Nawanshaln Central Cooperative Bank without adjusting the interest paid to the bank. Therefore, the reference is answered against the Revenue in the affirmative and in favour of the assessee.' The Hon'ble Hight court held that - "In view of the decision of Suprem Court in Kerala State Co-operative Marketing Federation Ltd. (supra), we are of the opinion that view taken by the tribunal is required to be upheld. 13.2 Regarding issue no.2, in view of the decision of the Gujarat High Court and more particularly para no. 8.1 & 8.2, we are of the opinion that the assessee is to be given the benefit of net income. 14. The view taken by the tribunal is required to be accepted, and therefore, both the issues are answered in favour of the assessee and against the Department." The copy of thi....
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....by the assessee. Thereafter, the assessment was completed U/s 148 r.w.s 143(3) of the Act by the A.O. vide his order dated 30.06.2017 after examining all the details. 12. We observed that the ld. PT.CIT or the Commissioner may call for and examine the record of any proceeding U/s 263 if he considers that any order passed therein by the A.O. is erroneous in so far as it is prejudicial to the interests of the revenue. However, on perusal of the order passed by the A.O. as well as order passed by the ld. Pr.CIT, we found that it is clearly manifest that in the present case, the case of the assessee was reopened U/s 148 of the Act on the ground that the A.O. had got information from the DDIT(System) that there was cash deposits of Rs. 50,55,800/- in the assessee's bank account maintained with Punjab national Bank of India during F.Y. 2009-10 relevant to A.Y. 2010-11 and the assessee has not filed return of income. Thereafter, the A.O. issued statutory notices and seeking queries from the assessee and in reply thereof, as discussed above, the assessee had produced all the details, copies of all the sources of income, submitted details of all the bank accounts, details of cash dep....
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....8/147 assessment. Our this view found strength from the decision of Coordinate Bench of this Tribunal in the case of Mahendra Singh Dhankhar HUF vs. ACIT ITA No. 265/JP/2020 Jun 30, 2021 (2021) 62 CCH 0271 Jaipur Trib where it has been held that: "Revision-Ordering revision where case is selected for limited scrutiny-Assessee firm is a real estate firm engaged in colonizing and developing residential projects-Case of assessee was selected for limited scrutiny through CASS on account of mismatch of AIR and CIB data, and mismatch in sale turnover reported in audit report and ITR-An addition for wrong calculation of LTCG was made by A.O. which was not challenged by assessee-Subsequently, on basis of certain audit objections, PCIT issued notice u/s 263-Assessee submitted that it is a case outside jurisdiction of Commissioner of Income tax to raise objections outside scope of limited scrutiny-PCIT ordered for 'Denovo' assessment without considering reply filed by assessee-Held, there is no dispute that scope of enquiry in case of limited scrutiny is only to extent of issues for which case was selected for scrutiny under CASS-CBDT has issued instructions from time to tim....
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....income and agricultural income-Case was selected for limited scrutiny for reason that there was a substantial increase in capital during year relevant to assessment year under consideration-AO accepted return filed by assessee-Pr. CIT issued notice to assessee u/s 263 and directed AO to make assessment afresh on issues mentioned in notice-Held, Tribunal in case of M/s Su-Raj Diamond Dealers Pvt. Ltd. CIT ITA No 3098/ Mum has quashed order passed u/s 263 in case of limited scrutiny assessment, holding that Pr. CIT under garb of section 263, cannot exceed his jurisdiction holding that when case of assessee was selected for limited scrutiny for reasons viz. (i) Large other expenses claimed in P&L A/c; and (ii) Low income in comparison to High Loans/advance /Investment in shares, therefore, no infirmity could be attributed to assessment framed by A.O on ground that he had failed to deal with other issues which though did not fall within realm of limited reasons for which case was selected for scrutiny assessment-In other words, Pr. CIT in garb of his revisional jurisdiction u/s 263 cannot be permitted to traverse beyond jurisdiction that was vested with A.O while framing assessment-As ....
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....t be verified in absence of proper documents which have not been filed during the assessment proceedings or during the proceedings u/s 263. On perusal of the order of the Ld. Pr. CIT and reply and details we found here that the ld. Pr. CIT one side has admitted that the Assessee Co-operative society had received interest of Rs. 14,05,464/- from FDR's from Sikar Kendriya Sahakari Bank Ltd, which is registered as a Co-operative Society certificate is enclosed the certificate is also placed before us at Page 33 of the paper book and during the course of hearing before us the ld. A/R has also drawn our attention at Page 26 of the reply to ld. Pr. CIT regarding the reply on the interest received from Co-operative Society and claim of deduction u/s 80P(2)(d) as under: "The Society is a registered co-operative society and claimed the deduction under section 80P complying with all the provisions within specified criteria. The society had claimed deduction u/s 80P(2)(d) of Rs. 1,08,464.00 in respect of income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income. The total inte....
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....examining all the details submitted by the assessee before the A.O. We have also noticed that during the course of assessment proceedings, the assessee had filed various details as required by the A.O. on the issue of cash deposits and on deductions u/s 80P and the A.O. himself at page No. 1 of its assessment order had categorically mentioned that in response to the notices the assessee has filed details/information which were examined and the case discussed time to time. Thereafter the AO at page 2 noted that assessee is a primary agricultural credit society and is entitled for deduction u/s 80P(2)(a)(i) for carrying on business of banking of providing credit facilities to its members and 80P(2)(a)(iv) for sale of fertilizers, seeds, pesticides, Pashu aahhar etc. to its members vide page 2 of the assessment order. The AO has also stated that after examination of books of account and vouchers on test check basis claim for deduction as stated above is found correct, accordingly deduction claimed by the assessee is allowed. vide page 2 of the assessment order. The AO has also asked about expenditures debited in the P&L account in response to the assessee also filed the reply. The AO ....
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....y or that such a view being formed is at the unfettered discretion of the Commissioner. The formation of his view has to be in a reasonable manner, it must stand the test of judicial scrutiny, and it must have, at its foundation, the inquiries, and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant- that an Assessing Officer is expected to be. If we are to proceed on the basis, as is being urged by the learned Departmental Representative and as is canvassed in the impugned order, that once Commissioner records his view that the order is passed without making inquiries or verifications which should have been made, we cannot question such a view and we must uphold the validity of revision order, for the recording of that view alone, it would result in a situation that the Commissioner can de facto exercise unfettered powers to subject any order to revision proceedings. To exercise such a revision power, if that proposition is to be upheld, will mean that virtually any order can be subjected to revision proceedings; all that will be necessary is the recording of the Commissioner's view that "the order is pass....
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.... to do in the course of his assessment proceedings. Is he to doubt or test every proposition put forward by the assessee and investigate all the claims made in the income tax return as deep as he can? The answer has to be emphatically in negative because, if he is to do so, the line of demarcation between scrutiny and investigation will get blurred, and, on a more practical note, it will be practically impossible to complete all the assessments allotted to him within no matter how liberal a time limit is framed. In scrutiny assessment proceedings, all that is required to be done is to examine the income tax return and claims made therein as to whether these are prima facie in accordance with the law and where one has any reasons to doubt the correctness of a claim made in the income tax return, probe into the matter deeper in detail. He need not look at everything with suspicion and investigate each and every claim made in the income tax return; a reasonable prima facie scrutiny of all the claims will be in order, and then take a call, in the light of his expert knowledge and experience, which areas, if at all any, required to be critically examined by a thorough probe. While it is....
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....f 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 ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO 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 ITO is unsustainable in law." The test for what is the least expected of a prudent, judicious and responsible Assessing Officer in the normal course of his assessment work, or what constitutes a permissible course of action for the Assessing Officer, is not what he should have done in the ideal circumstances, but what an Assessing Officer, in the course of his performance of his duties as an Assessing Officer should, as a prudent, judicious or reasonable public servant, reasonably do bonafide in a real-life situation. It is also important to bear in mind the fact that lack of bonafides or unreasonableness in conduct cannot be inferred on mere suspicion; there have to be some strong indicators in direction, or there has to be a....
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....y of the view that the AO has not examined the issue of deduction u/s 80P(2)(d). When he has issued the notice u/s 263 on 25.03.2021 and sought the reply on the very next day i.e on dt.26.03.2021, despite being very short span of time assessee filed the detailed reply and after receiving reply the ld. Pr. CIT has passed the order on 31.03.2021 straight way without confronting the issue or asking any query, question explanation on the issue. It was duty of the Pr. CIT as per decision of Dorabji Tata Trust vs. DCIT (EXEMPTION) (Supra). However, the ld. PT.CIT failed to do so and summarily reach to the conclusion that the order was prejudicial to the interest of revenue. Such a view taken by the PT.CIT is not well founded in the law or by various Hon'ble courts. In this regard, we rely on decisions in cases of Smt. Leela Choudhary v/s PR. CIT 289 ITR 226(Gau.), Saw Pipes Ltd v/s Add. Pr, CIT 94 TTJ 1035(Del), Malabar Industrial Co. Ltd. v/s PR.CIT 159 CTR(IXSC) and PR. CIT v/s Rayn Silk Mills 221 ITR 155(Guj.). 18. It is an admitted fact that there is no straight jacket formula or parameter to make inquiry in the assessment proceedings' What is required is that the AO shoul....