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2022 (9) TMI 585
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....ng officer without appreciating the fact that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefore the order passed by the learned Principal Commissioner of Income-tax, Bangalore 1, is ultra vires the scope of Section 263 and requires to be cancelled under the facts and circumstances of the Appellant's case. 3. The learned Principal Commissioner of Income-Tax is not justified in invoking the provision u/s 263 and holding that the order passed by the Assessing Officer u/s 143 (3) dated 5/11/2019 as erroneous and pre-judicial to the interest of the revenue by ignoring the fact that the Assessing Officer had applied his mind on the issues and had taken the view accepting and following judicial discipline. Therefore, the order u/s 263 does not survive and deserves to be cancelled. 4. The learned Principal Commissioner of Income-tax, Bangalore failed to appreciate the fact that the direction to make fresh assessment, tantamount to ordering for making fishing and roving enquires without any material in support thereof and consequently the impugned order u/s 263 of the Act passed by the authorities is bad in law....
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.... The assessing officer during the course of assessment cannot carry out another assessment for the year 2009-10 to verify the correctness of the claim. 11. If the claim for brought forward losses are to be verified the learned AO ought to have reopened the assessment for such year and could have verified the claim. Hence even at this juncture, during the revisory proceedings, the assessing officer can only verify if the loss is validly claimed and carried forward. The learned AO cannot carry out another assessment to verify the claim for 2009-10 to establish the genuinity of the claim of brought forward losses. Hence the order is bad in law. 12. Without prejudice, even assuming for the argument sake, without conceding now the Assessing officer does not have powers to conduct fresh assessment for assessment for AY 2009- 10 and AY 2014-15. For verification of the veracity of the losses, the only thing that can be done is to see if the returns are filed on time and validly carried forward. The Assessing officer shall not have powers to verify if the claim is correct or wrong. If done so, will tantamount to fresh assessment and will defeat the purpose of specifying li....
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....nd equity." 2. The assessee is a HUF and had filed the return of income for the AY 2017-18 on 28.7.2017 declaring a total income of Rs.1,22,72,360. The case was selected for limited scrutiny under CASS and the assessment proceedings were initiated by serving notice u/s. 143(2) of the Act. The AO called on various details from time to time and concluded the assessment by making an addition of Rs.14,90,000 as unexplained money u/s.69A. The PCIT on verification of assessment records noticed that the assessee has set off Rs.2,04,83,780 being short term capital gain against the brought forward short term capital loss. The PCIT was of the view that the AO has not examined the veracity of the brought forward short term capital loss which is set off against the current year's short term capital again. Further, the assessee has claimed long term capital gain exempt income to the tune of Rs.5,74,00,974 on which STT is paid. The PCIT stated that no details of any transaction are available in the SFT data under ITS details in 360 degree view of the assessee and the AO did not verify the exempt income claim of the assessee. The PCIT issued a show cause notice to the assessee in this regard. ....
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....ed for the limited purpose of verification of securities transaction wherein the losses including the brought forward losses were verified and accepted by the revenue. 6. The ld.DR supported the order of the PCIT. 7. We have considered the rival submissions and perused the material on record. The ld. AR also submitted a chart containing the details of brought forward and set off of losses from AY 2009-10 to 2017-18 (page 124 of PB) which is the summary of brought forward loss of the assessee as per the return of income filed which is reproduced below:- SI. No. Assessment year Date of filing (DD/MM/Y House Property Loss Business or profession loss Short term capital Long term capital loss Loss from owning and maintaining race horses I 2009-10 26-07-2009 0 0 316177650 0 0 ii 2010-11 26-07-2010 0 0 2108184 0 0 iii 2011-12 30-07-2011 0 0 13531141 0 0 iv 2012-13 31-07-2012 0 0 9959757 0 0 v 2013-14 0 0 0 0 vi 2014-15 23-07-2014 0 0 19731062 0 0 vii 2015-16 0 0 0 0 ....
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....n passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person." 10. Thus, from close scrutiny of the provisions of section 263, it is evident that twin conditions are required to be satisfied for exercise of revisional jurisdiction under section 263 of the Act i.e., firstly, the order of the Assessing Officer is erroneous; and secondly, it is prejudicial to the interests of the revenue on account of error in the order of assessment. The Bombay High Court in the case of Gabriel India Ltd. (1993) 203 ITR 108 has explained as to when an order can be termed as erroneous as follows:- "From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an income tax officer acting in accordance with the law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-t....
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....Act is not one that depends on possibility as a guess work, but it should be actually an error either of fact or of law. The ld PCIT has further held the order of the AO to be erroneous on the basis that the AO ought to have verified by the brought forward losses of earlier years. This, in our considered view, is not tenable since the verification of loss incurred in the years beginning AY 2009-10 is beyond the scope of scrutiny assessment of AY 2017- 18. Further, from the perusal of facts, the security transactions have been scrutinized in the proceedings u/s.143(3) for AY 2015-16 and the revenue has accepted the losses including the brought forward losses. This supports the contention of the ld AR that since the brought forward loss has already been verified and accepted by the revenue during the assessment proceedings of AY 2015-16 the order of the AO passed for the year under consideration cannot be considered as erroneous on this ground. 12. With regard to the argument that the assessee's case requires to be considered in the light of the explanation (2) to Section 263 of the Act that the AO has not made proper enquiry, we notice that the Hon'ble Gujarat High Court in the c....
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....orthiness of the lenders. Accordingly, the Ld. AO after verifying the details of unsecured loans being satisfied, accepted the submissions of the assessee which leads to infer that the Assessing Officer had made full enquiries of unsecured loans by raising the queries and calling for the all information in respect of the loan taken along with details evidences in support thereof and the same were also duly replied by the assessee and on receipt of all the details of evidences, the unsecured loans received by the assessee were accepted by the Assessing Officer and the assessment was finalised u/s.143(3) of the Act on 15-3-2016. We also note that there was audit objection in the case of the assessee. The language of audit objection and showcause notice under section 263 is same meaning thereby that the show cause notice u/s.263 has been issued by the PCIT Without going through assessment records and without exercising his own application of his mind. The assessee has not only filed complete details of Income-tax Return, audited balance sheet, profit and loss account and bank statement. The assessee further explained that both the these unsecured loans stands fully repaid as on the da....
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....umbai ga in the case of Narayan Tatu Rane - 70 taxmann.com 227 (Mum. Trt.) [PB 153-1561 wherein held that explanation cannot laid to have over ridden the law as interpreted/the various High Courts where the High Courts have held that before reaching the conclusion that the order of the Assessing Officer is erroneous prejudicial to the interest of Revenue. The CIT himself has to undertake some enquiry to establish that the assessment order is erroneous and prejudicial to the interest of Revenue. The ld. Counsel relied on the decision of M/s. Amira Pure Foods Pvt. Ltd., v. PCIT in ITA No.3205/Del/2017 and Ahmedabad Tribunal in the case of Torrent Pharmaceuticals Ltd. v. DCIT [2018] 97 taxmann.com 671 (Ahd. - Trib.). it is clear from the enquiries made by the Assessing Officer and submissions made by the assessee that the Assessing Officer has taken the plausible view which is valid in the eyes of law. The Assessing Officer was satisfied consequent to making enquiry and after examining the evidences produced by the assessee, he accepted the assessee's claim of loan similar view were also expressed by the Hon'ble Delhi High Court in the case of CIT v. Vodafone Essar South Ltd. ....
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....l to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 53.3 Applicability: This amendment has taken effect from 1st day of June, 2015." "17 We thus find merit in the plea of the assessee that the Revisional Commissioner is expected show that the view taken by the AO is wholly unsustainable in law before embarking upon exercise of revisionary powers. The revisional powers cannot be exercised for directing a fuller inquiry to merely find out if the earlier view taken is erroneous particularly when a view was already taken after inquiry. If such course of action as interpreted by the Revisional Commissioner in the light of the Explanation 2 is permitted, Revisional Commissioner can possibly find fault with each and every assessment order without himself making any inquiry or verification and without establishing that assessment order is not sustainable in law. This would inevitably mean that every order of the lower authority would thus become susceptible to section 263 of the Act and, in turn, will cause serious unintended hardship to the tax payer concerned for no fault on his part. Apparently,....
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....es in detail and after applying mind, accepted the genuineness of loans received by the respondent assessee from the aforesaid two companies and such view of the Assessing Officer is a plausible view, and therefore, the same cannot be said to be erroneous or prejudicial to the interest of the Revenue." 13. The SLP against the above order of the Hon'ble High Court was dismissed by the Hon'ble Supreme Court, thereby the issue, that the explanation (2) to Section 263 of the Act could be invoked only in a very gross case of inadequacy in enquiring or where the mandatory enquiries are not conducted, has reached finality. 14. In view of the above discussion, we are of the view, that the AO in the given case has conducted enquiry and perused the details submitted and has taken a decision to accept the brought forward loss based on explanation provided by the assessee after proper application of mind. We therefore hold that the PCIT is not justified in setting aside the order of the AO with regard to the issue of verification of brought forward losses and accordingly the impugned order of the PCIT is quashed to the limited extend of this issue. 15. The PCIT has also held the order....