TaxTMI 
TaxTMI 
2022 (11) TMI 200
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.... Pro CIT erred in setting aside the assessment order dated 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 01.10.2....
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.....13,51,350/-, which had reduced the income claimed from miscellaneous sources (primarily interest income). It is also 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 submi....
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....24,300/- from F&O transactions. Despite 'low income' being one of the primary reasons for selection of scrutiny of the case, no details were called for by the Ld. AO on 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. Counse....
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.... to the interests of the revenue should flow from and be the consequence of his examination of the record or proceedings. If such a consideration is not preceded by the examination of record 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 ....
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....6 to 39 along with relevant supporting documents from pages 40 to 69 in the paper book. Ld. CIT, DR also pointed out that there was no business of sarees undertaken by the assessee in the earlier years 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 eithe....
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.... 14.1.4. The Hon'ble Court further held that this distinction must be kept in mind by the CIT while exercising jurisdiction u/s 263 of the Act and in the absence of the finding that the order is erroneous 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 materia....
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....at the consideration for holding the order as erroneous and prejudicial to the interest of revenue should flow and be the consequence of examination of record of proceedings by the Ld. Pr. CIT. 14.5. On the aspect of 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 sh....
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....g the returned income as assessed income. 14.7. Ld. Pr. CIT also referred to the insertion of explanation 2 to section 263 of the Act w.e.f. 01.06.2015 which is reproduced below: "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 Chief Commissioner or Chief Commissioner or Chief Commissioner or 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 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." 15. We note that Ld. Pr. CIT on his own examination of the assessment records has carefully and ela....