TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 200
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated 21st day of September, 2017 and directing the Assessing Officer to pass a fresh assessment order. 3. That on the facts and circumstances of the case and in law, the impugned order passed by the PCIT is illegal and bad in law, being barred by limitation prescribed under section 263(2) of the Act. 4. That appellant craves leave to produce additional evidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. 5. That appellant craves to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal" 3. Before us, Shri Raja Ram Chowdhury and Shri Vinay Jalan, FCA represented the assessee and Shri Sudipta Guha, CIT, DR represented the Department. 4. We note that there is a delay of 430 days in filing the appeal for which petition for condonation of delay along with affidavit is placed on record. The impugned order was passed on 29.05.2020 for which the appeal should have been filed before the Tribunal on or before 28.07.2020. This due date fell during the period of Pandemic of Covid 19. The appeal was filed on 01.10.2021. The period of delay is covered for exclusion by the order of Hon'ble S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso apparent that the assessee claimed a loss of Rs. 9,24,300/- from F & O transactions. No details were called for by the officer on both these issues, considering that low income was one of the primary reasons for selection of scrutiny in this case. In the course of assessment proceedings, the A.0 had passed the order without proper verification/examination of the issues mentioned above and accordingly making disallowance/addition in this regard." 6. Assessee submitted its reply on the above show cause that its case was selected for limited scrutiny on the following reasons: (i) Low income in comparison to very high investments and (ii) Large increase in investment in unlisted equities during the year. It was submitted by the assessee that all the details and documents as required by the Ld. AO on the above two issues were furnished in the course of assessment proceedings vide letter dated 11.09.2017 and 21.09.2017. It was also submitted that Ld. AO had formed an opinion on the said issues after being satisfied with the aforesaid submissions and was pleased to pass the assessment order dated 21.09.2017 by accepting the returned income as the assessed income. Assessee th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n this issue. 8. Taking into account these observations and discrepancies, Ld. Pr. CIT drew his consideration that the AO has not done verification on the issues for which the case was taken up for scrutiny assessment as is evident from the assessment order, the order sheet of the assessment proceedings and the submission of the assessee which is dated 21.09.2017, when the case was discussed and heard on 19.09.2017. Thus, on the basis of all these details, Ld. Pr. CIT concluded that Ld. AO has not carried out proper verification and completed the assessment without application of mind. Ld. Pr. CIT thus completed the revisionary proceedings by holding that impugned assessment order dated 21.09.2017 is erroneous in so far as prejudicial to the interest of the revenue and restored the file back to the Ld. AO with a direction to verify the issue as discussed in para 3 and 6 of his order afresh after giving opportunity to the assessee. Aggrieved, the assessee is in appeal before the Tribunal. 9. Before us, Ld. Counsel for the assessee has placed on record a paper book containing 124 pages. At the outset, Ld. Counsel challenges the assumption of jurisdiction by the Ld. Pr. CIT for invo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecord of the proceedings under the Act, the condition for revision does not get magnetized." The Ld. Counsel further referred to the decision of Hon'ble jurisdictional High Court of Calcutta in the case of Pr. CIT Vs. Sinhotia Metals & Minerals Pvt. Ltd. in IA No. GA/1/2019 in ITAT/104/2019 dated 07.01.2022 from which it was pointed out as under: "After noting the said decision the Tribunal points out that the appellant department has not controverted the contents of the letter of the Joint Commissioner of Income Tax dated 18th August, 2016 and has recorded that the said letter clearly brings out that the PCIT has called for proposal from the JCIT/Assessing Officer to exercise jurisdiction under section 263 of the Act. Therefore, the Tribunal concluded that the PCIT has not exercised jurisdiction under section 263 of the Act himself, but he exercised jurisdiction at the instance of the Assessing Officer/JCIT, which is against the provisions of law." 11. On the aspect of selection of case for limited scrutiny and Ld. Pr. CIT making contradictory observations on the issue of limited scrutiny as alleged by the Ld. Counsel, he placed reliance on the decision of the Co-ordinate Benc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ears nor in the subsequent years. He thus submitted that Ld. Pr. CIT has carefully and thoroughly examined the assessment records and brought to surface, the discrepancies of the assessment proceedings which lacked enquiry on the two issues for which the case was selected for scrutiny assessment and thus, the revision has been rightly done in accordance with the provisions of section 263 of the Act. 14. We have carefully considered the rival submissions and perused the material available on record and given our thoughtful consideration to the submissions made by both the parties. On the contention of the Ld. Counsel of the assessee that the impugned assessment has been held to be erroneous in so far as it is prejudicial to the interest of revenue by the ld. Pr. CIT on the basis of proposal of the Ld. AO, it is appropriate to understand the role of proposal of ld. AO made before the ld. PCIT. To our understanding, it is nothing more than a 'stimuli' for the ld. PCIT which could be either an internal or external source. It is 'suggestive' in nature on which the ld. PCIT is required to apply his independent mind to draw his own consideration. It is a source or a clue which tinkers th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and prejudicial to the interest of revenue, exercise of jurisdiction under the said section is not sustainable. In most cases of alleged "inadequate investigation", it will be difficult to hold that the order of the AO, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/enquiry himself. The order of the AO may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the AO to decide whether the order was erroneous. This is not permissible. An order is erroneous, unless the CIT holds and records reason why it is erroneous. Therefore, CIT must after recording reasons, hold that order is erroneous. The jurisdictional pre-condition stipulated is that CIT must come to the conclusion that the order is erroneous and is unsustainable in law. 14.1.5. It was further observed by the Hon'ble High Court that the material, which the CIT can rely up on includes not only the records as it stands at the time when the order in question was passed by the AO but also records as it stands at the time of the examination by the CIT. Not....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... limited scrutiny, in the case laws referred to by the Ld. Counsel, it is held that in limited scrutiny assessment, scope of verification is limited to the issues for which the selection is made and Ld. Pr. CIT cannot revise the assessment order on the issues other than the issues considered by the AO in the assessment proceedings. We note that there is a discrepancy emanating from the noting made in the order sheet of the assessment proceedings (reproduced supra) and the submissions claimed to have been made by the assessee dated 21.09.2017 which demonstrates that ld. AO has not applied his mind and executed the due verification and examination on the two issues (supra) for which the case was selected for limited scrutiny. 14.6. It is a fact on record that the discussion and hearing of the assessment was concluded on 19.09.2017 for which both the Ld. AO and the authorized representative of the assessee, Ms. Manisha Patwari had put their signatures on the order sheet (reproduced supra). Ld. Counsel has repeatedly claimed that all the submissions were made vide letter dated 11.09.2017 and 21.09.2017, more importantly all the relevant submissions and explanations relating to the two....