TaxTMI 
TaxTMI 
2023 (10) TMI 455
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....till February 28th, 2022 and are to be excluded as held by the Hon'ble Apex Court's vide order dt. 10/01/2022. As far as the remaining delay of 256 days is concerned, it was submitted that the assessee was never served the show cause notice u/s 263 of the Act on its registered e-mail id [email protected] and same was the situation for the service for the impugned order u/s 263 of the Act which was also never served upon the assessee on its registered e-mail id. Further the assessee company was also unaware about the subsequent proceedings initiated giving effect to the order passed u/s 263 of the Act, as again there was no service of the same on the e-mail id of the assessee. The assessee came to know about the impugned order only when it received the demand letter dt. 14/11/2022 for Assessment Year 2015- 16 on its e-mail id and thereafter the relevant papers in relation to the above matter were handed to the tax consultant. Under these given facts and also in view of the decision of this Tribunal in the case of Shri Mohan Chandra Das vs. PCIT in ITA No. 766/Kol/2022; Assessment Year 2014-15; order dt. 18/04/2023, the ld. Counsel for the assessee prayed that the delay be condoned ....
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....y threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so." 7. Similarly, we would like to make reference to authoritative prono....
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.... party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a ITA No.201, 202 and 203/Ahd/2020 salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss." 8. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach. 9. In light of the above, if we examine the explanation of the assessee then, it would reveal that basically the delay has occurred because the assessee was completely unaware of the appellate proceedings and the assessee did not have any malafide intention to cause the delay. Therefore, cumulative setting of all these factors would suggest that there is no deliberate delay at the end of the assessee because the assessee was not going to gain anything from delaying this appeal. It is also pertinent to note t....
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....u/s. 263 of the Act and setting aside the assessment order u/s. 143(3) of the Act for fresh assessment, totally ignoring the explanation of the assessee that the above issue was already examined at the time of original assessment proceeding and it is after being satisfied with the details and explanations submitted by the assessee that the original assessment was completed u/s. 143(3) of the Act on 25/07/2017 accepting the genuineness of the impugned loan transaction and alleged discrepancy in receipts between the return of income and Form 26AS. 5. That, the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/ or rescind any or all of the above grounds." 11. Brief facts as culled out from the record is that assessee is a Private Limited company and is engaged in the business of warehousing of tea chests. Income of Rs. 60,34,350/- declared in the e-return filed on 30/09/2015. Case selected for scrutiny followed by serving of notices u/s 142(1) of the Act requiring the assessee to file various details and also notices u/s 143(2) of the Act duly served upon the assessee. Books of accounts, bills and vouchers were produced and examined on test ch....
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....aking disallowance/addition in this regard." 11.1. In response to the notice dt. 12/03/2020, no one appeared and the ld. Pr. CIT without giving any further opportunity concluded the proceedings on 23/03/2020, discussing judicial pronouncements and without giving any finding on the issues raised in the show cause notice held that the order of the Assessing Officer dt. 25/07/2017 is erroneous insofar as it was prejudicial to the interest of the revenue. 12. Aggrieved, the assessee is now in appeal before the Tribunal. 13. The ld. Counsel for the assessee submitted that all the issues raised in the show cause notice u/s 263 of the Act already stands addressed by the assessee in reply to the questionnaire issued u/s 142(1) of the Act by the Assessing Officer. Reference was made to the paper book dt. 27/02/2023 containing 63 pages wherein it has been stated that the reply of the assessee u/s 142(1) of the Act was filed enclosing therewith all the relevant details which has been thoroughly examined by the Assessing Officer. Further he submitted that it is not the case of no enquiry or incomplete enquiry and in view of the settled judicial precedents, wherein it has been consiste....
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....ke note of this section which reads as under: "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing ....
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....oneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. 16.1. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) has laid down foll....
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....(ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue - recourse cannot be had to sec. 263 (1) of the Act. It also held at pg-88 as follows: "The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of 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 Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income-tax Officer 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 Income-tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer acce....
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....the Income Tax Officer, who passed the order unless the decision is not in accordance with the law; that to invoke suomotu revisional powers to reopen a concluded assessment under sec. 263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suomotu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer,....
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....al to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. It held that the Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new versions which they present as to what should be the inference or proper inference either of the facts disclosed or the weight of the circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted; that to do so is to divide one argument into two and multiply the litigation. It held that cases may be visualized where the Income Tax Officer while making an assessment examines the accounts, makes inquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting....
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.... by him, as she would have a full opportunity for showing to the income tax officer whether he had jurisdiction or not and whether the income tax assessed in the assessment years which were originally passed were correct or not" 31. From the above decisions, the following principles as to exercise of jurisdiction by the Commissioner u/s. 263 of the Act can be culled out: a) The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue - recourse cannot be had to sec. 263 (1) of the Act. b) Every loss of 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 Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous ....
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....pplication of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. g) The power of the Commissioner under sec. 263 (1) is not Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment. 16.3. The Hon'ble Delhi High Court in the case of Income tax Officer vs. DG Housing Projects Ltd 343 ITR 329 (Delhi), has held as follows:- "Revenue does not have any right to appeal to the first appellate authority against an order passed by the Assessing Officer. S. 263 has been enacted to empower the CIT to exercise power of revision and revise any order passed by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expression "prejudicial to the interest of the Revenue" is of wide import and is not confined to merely loss of tax. The term "erroneous" means a wrong/incorrect decision deviating from law. This expression p....
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....not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question. This distinction must be kept in mind by the CIT while exercising jurisdiction under 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 Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer 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 Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reason....
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....ailable on record that the tax credit available with the assessee as per 26AS was Rs. 11,23,228/- whereas the assessee claimed Rs. 11,16,805/- in ITR. 3. In regard to other two CASS points, no submission/clarification/ reconciliation had been filed by the assessee, but the officer had not taken any adverse view on those issues. In the course of assessment proceedings, the A.O had passed the order without proper verification/examination of the issues mentioned above and accordingly making disallowance/addition in this regard." 18. Now, we have to first see whether these issues were raised by the Assessing Officer during the course of assessment proceedings u/s 143(3) of the Act. The details of the same are available on paper book page no. 7 and the same is extracted below:- " Particulars of Accounts and/or documents required 1. Short resume of all business activities along with full addresses of all business premises, godowns, branch office etc. 2. Copies of Income Tax Return, acknowledgement of return. Tax Audit Report for the A.Y. 2015-16 and relevant Profit and Loss Account and Balance Sheet. 3. Names of all the Directors w....
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....t of Rs. 3,679/- may not have been deposited within the time of filing I.T. Return on 30.09.2015. Otherwise, the TDS claimed in the I.T. Return for Rs. 11, 16,796/- was almost accepted by the system and Rs. 11,16,805/-, as was deposited within that time of filing I.T. Return on 30.09.2015 was allowed by the system. For your kind information, Form No 26AS as was up-dated on 11.09.2015 showing total TDS of Rs. 11,13,126/- is enclosed." 19. Further we also notice that a copy of the order sheet has been filed wherein also ld. Assessing Officer has firstly referred to the date of issuing notice u/s 142(1) of the Act. Thereafter, a reply has been filed by the assessee on 14/07/2017 and on the very same day assessee was asked to produce the books of accounts and other bills and vouchers. Then on 19/07/2017, the A/R of the assessee appeared and submitted the documents which were filed on record and also produced the books of accounts, bills and vouchers etc., which were test checked and returned back to the assessee and finally on 25/07/2017, case was completed as assessed. 20. From the reply given by the assessee extracted (supra) on 14/07/2017, we notice that the ....