AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 1422
X X X X Extracts X X X X
X X X X Extracts X X X X
....as erred in taking action u/s 263 of the Act and setting aside the assessment order for passing de-novo assessment order. 3. The brief facts of the case are that the assessee has filed its return of income electronically on 28/11/2015 declaring total income at Rs. 5,13,71,110/-. The assessee has also shown income of Rs. 381,18,39,146/- u/s 115JB (MAT). The case was selected for scrutiny assessment and notice u/s 143(2) of the Act was issued and served upon the assessee on 07/04/2016. After going through the details submitted by the assessee, the Assessing Officer passed a scrutiny assessment order on 31/05/2017 u/s 143(3) of the Act. 4. Before adjudicating the specific issue discussed in the impugned order, we would like to make a mention that earlier a notice u/s 263 of the Act was issued on 11/06/2019 by the ld. Pr. CIT-1, Patna. According to the assessee, this notice was later on dropped after the reply of the assessee. We will discuss the relevancy of this aspect in later part of this order. On perusal of the assessment order, the ld. CIT found that the assessment order is erroneous as well as prejudicial to the interest of the revenue. Therefore, he issued the show-cause not....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.- In computing the period of limitation for the purposes of subsection (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 7. A bare perusal of the sub section-1 would reveal that powers of revi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of 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 interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law. (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his 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 CIT does not fee stratified....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d "inadequate inquiry". If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open". 9. In the case of Gee Vee Enterprise vs. Commissioner of Income Tax reported in 99 ITR page 375, the Hon'ble court has expounded the approach of ld. Assessing Officer while passing assessment order. The observation of the Hon'ble court on pages 386 of journal read as under:- "... it is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very diffident from that of a civil court. The statement made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the abse....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 2020 to the 29 day of June, 2020 or such other date after the 29th day of June 2020 as the Central Government may, by notification, specify in this behalf, for the completion of such action as - (a) Completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the specified Act; or" 11. The ld. Counsel for the assessee further submitted that completion of any proceeding or passing of any order, pre-supposes initiation of proceedings and/or pendency of any proceedings by issuing of a notice on or before 20/03/2020, is absent in the present case. He pointed out that the proceedings on the first reason is based on the letter of CIT D/R, (ITAT, Mumbai Bench) dt. 14/10/2020 and, therefore, the order has to be construed as passed beyond the period of limitation u/s 263 of the Act. 12. We have duly considered the first fold contention raised by the ld. Counsel for the assessee. However, we do not find any merit in this contentions because the ld. Counsel for the assessee failed to expla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is mandatory for the assessee to enter into an agreement with DSIR by fulfilling the criteria in Form 3CK as prescribed in Income Tax Rule, 1962. Consequent upon the agreement, the DSIR is required to submit a report in Form 3CL under Income Tax Rules, 1962 with regard to annual expenditure incurred by the assessee on Research and Development. As per the letter of DSIR dated- 24.01.2018, it is found that the amount of R & D expenditure incurred by the assessee is only Rs. 6061.72 lac. However the entire claim has been allowed. The overlooking of these facts has made the assessment in this case erroneous in so far as it is prejudicial to the interests of the revenue. 2. On the facts and in the circumstances of the case as discussed above, it is observed that the Assessing Officer (AO) passed the order u/s 143(3) of the Income Tax Act, 1961 dated 31.05.2017 without proper application of law and without making the required investigation/enquiry which he was legally bound to make before completing the assessment under section 143 (3) of the Act making the order passed by him erroneous and prejudicial to the interests of revenue. 3. Therefore, the undersigned proposes to revise the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the computation of income of Rs. 20,17,86,432/-. But thereafter the ld. Pr. CIT has observed that the Assessing Officer failed to make an enquiry as to why the assessee has offered net income and not the gross income. He put emphasis on the last paragraph of page no. 19 of the impugned order. The finding of the ld. Pr. CIT in this regard, reads as under:- "5. The contention of the assessee has been examined with reference to the material on record. The CIT(DR), ITAT-7, Bench-A, Mumbai Vide letter dated 14.10.2020, addressed to ITO, Ward-23(1) (2), Mumbai and a copy endorsed to PCIT-1, Patna communicated that the AOP namely Avenue Venture Real Estate Fund (for short "AVREF") has filed its return of income for the A.Y 2015-16 on 29.08.2015 declaring total income at Nil. Assessment u/s 143(3) of the IT Act, 1961 was made assessing total income of AVREF at Rs. 201786430/- by ITO, Ward-23(1)(2), Mumbai on 28.12.2017. The AOP claimed a refund of Rs. 63856139/- for the year under consideration and stated before the AO that during the F.Y 2014-15 AVREF has earned taxable income of Rs. 201786432/-, which has been offered to tax by the beneficiary M/s Alkem Laboratories Ltd. (for short "A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5,07,845/- Legal & Professional Fee 5,61,800/- 5,61,800/- Total of Expense [B] :: 5,74,74,365/- 5,74,74,365/- Difference [A-B] 28,37,40,612/- 14,43,12,067/- Assessee has been asked to substantiate with accounts, details etc. showing that the payments made by it to AVREF was disallowed or added back to its income. The assessee vide letter dated 26.03.2021 submitted the working of the same and expressed that in the absence of specific head in the ITR it has been shown under the head "other income" and sub head "interest income". Further it has been clarified that the assessee has shown interest income of Rs. 1332214996/- under the Schedule of P &L Account in the ITR. The same is verifiable. The assessee failed to clarify why the net of receipt of Rs. 1332214996/- was offered to tax and not the entire amount of Rs. 201786432/-, being the payment made by it to AVREF, the AOP which is an independent entity chargeable to tax. This claim of assessee before the Hon'ble ITAT is against the basic principles of accounting and provisions of law as AVREF is an AOP already assessed to tax by the AO at Mumbai. Probably assessee made such claims before the Hon'ble ITAT Mu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hout properly analyzing the record and the computation of income filed by the assessee. In other words, a show-cause notice to the assessee would have been in different terms. 20. In the letter of the CIT D/R, it is discernible that a trust, namely, AVREF was setup under the provisions of the Indian Trust Act, 1882. The trust was required to manage the real estate portfolio for the assessee and the assessee is the sole beneficiary. The assessment order in the case of the Trust was passed on 28th December, 2017 i.e., much after the assessment of the assessee. The income was offered in the hands of the assessee in the capacity of the beneficiary. The letter makes a reference about two CBDT Circulars which authorize the Income Tax Officer to exercise his option to tax, in the hands of the Trust or the beneficiary and once the choice is made by the Department to tax either the Trustee or the beneficiary, it is no more open to the Department to assess the same income in the hands of the other person (i.e., the beneficiary or the trust). Thus, once the income was offered by the beneficiary and assessed in its hand on 31/05/2017, it should not be explored to be assessed in the hands of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee and the assessee filed reply on this issue. The reply was brought to the notice of the ld. Pr. CIT and relevant part of the reply is available at page 46 to 48 of the paper book. We deem it proper to take cognizance of this reply which reads as under:- "8. Transaction with Reynolds Petro Chems Ltd. That as required the petitioner is enclosing here with the details of transaction with the aforesaid party along with bills raised during the year under consideration. The petitioner has paid commission to the aforesaid party amounting to Rs. 1.61 crore. Similar query was raised in the immediately preceding year i.e. A.Y. 2014-15 wherein, the department has served the petitioner with copy of Deputy Director (Inv.), Unit-3 (3), Mumbai dated 11.04.2016 along with statements (relevant pages) of one Mr. Suneet Kabra, Chartered Accountant, dated 17.04.2015. Japdish Chandra Somani dated 17.04.2015 and Sanjay Paras Mal Jain dated 16.04.2015. As per report of the Deputy Director (Inv.), Unit-3 (3), Mumbai "the facts indicated that the transaction of commission expenses payment by Alkem Laboratories Ltd. to the assessee M/s Reynolds Petro Chems Ltd. are not genuine. No services have ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is signing the document as per instruction of Sri Somani. With regard to the business activity of Reynolds Petro Chems Ltd., he has clearly stated in answer to question no. 18 that he is not exactly aware of the activities carried out by RPCL and has also stated that Sri Kabra and Sri Somani can tell about the activities. Further, he has categorically stated that he left RPCL in the month of July, 2014 and is doing part time accounts work with different client/parties. The Deputy Director (Inv.) in para-3 of the report has placed heavy reliance on the statement of Mr Somani (question no.17 at page 4). The copy of the statement supplied to the petitioner contains first page upto question no.3, there is no second page and the third page starts from question no.11. Thus, the petitioner is not aware of the question and answers at page 2bearing nos. 4 to 10. Thereafter, it continues uptill question no.21 page nos.-4 to 6. The said director in answer to question no.20 (page-6 of the statement) has categorically stated that "sir we accommodated commission expenses to most of our suppliers. I am submitting ledger copy of our commission income received". Thus, the modus operandi explained i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment order but, it does not mean that enquiry was not conducted. He submitted that passing of an assessment order is the prerogative of the Assessing Officer and the assessee has no control over the language or the manner in which the assessment order is to be drafted. But on account of nondiscussion of an issue, the assessee should not suffer a second round of proceedings. It has to be examined whether the details were filed by the assessee before the Assessing Officer and the Assessing Officer has applied his mind on all these details and after being satisfied with the contention, he had taken a plausible view accepting the stand of the assessee, without making any finding. For buttressing this contention, he relied on the judgment of the Hon'ble Patna High Court in the case of CIT vs. Mukul Kumar reported in (2009) 4 PLJR 417. He placed on record a copy of this decision. He also placed reliance on the following case-laws:- Banco Products (India) Ltd. v. DCIT (2018) 405 ITR 318/ 258 Taxman 244 (Guj) (HC) CIT v. Claris Lifesciences Ltd. [2010] 326 ITR 251/[2008] 174 Taxman 113 Commissioner of Income Tax v. Sandan Vikas (India) Ltd., [2011] 335 ITR 117 ....