AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2023 (11) TMI 239
X X X X Extracts X X X X
X X X X Extracts X X X X
...., in the opinion of the Principal Commissioner or Commissioner,- 1. The order is passed without making inquiries or verification which should have been made; 2. The order is passed without allowing any relief without inquiring into the claim; 3. The order has not been made in accordance with any order, direction or instruction issued by the Board under Section 19; or 4. 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" Clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made. Hence, what is relevant for clause (a) of Explanation 2 to Section 263 is whether the Assessing Officer has passed the order after carrying out enquiries or verification, which a reasonable and prudent officer would have carried out or not. Therefore, the order passed by the Assessing Officer is not only erroneous but also prejudicial to the interest of Revenue. Hence, in my considered view, it is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....come Tax Act, 1961. The Appellate Commissioner dropped the penalty. 6. By the aforesaid order, the Appellate Commissioner dropped the proceedings holding that the gold jewellery was received by the petitioner during her marriage cannot be ruled out and therefore no concealment was established beyond doubt and simply because the petitioner failed to file an appeal before the quantum addition, question of imposing penalty automatically did not arise. 7. Relevant portion of the order of the Appellate Commissioner reads as under: ""Giving streedhan property during marriage to the girl child is a practice in South India and also recognized under the Hindu Marriages Act. Therefore the claim of the appellant that the gold jewellery was received as streedhan during their marriage cannot be totally ruled out. In the circumstances, I am of the view that concealment is not established beyond doubt. Simply because the appellant failed to file appeal against the quantum addition, penalty cannot be automatic. Hence the penalty order cannot be sustained." 8. The Department preferred an appeal before the Income Tax Appellate Tribunal in I.T.A.No.1450/Mds/2016. The petitioner also....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ciliation by affording an explanation which has been stated in the appeal as well as in the miscellaneous petition before the Tribunal. Relevant portion of the common judgment of this Court dated 03.07.2019 reads as under: "11. It appears that the decision in the case of Shanmugapriya was not placed before the Tribunal when the impugned order was passed. Nevertheless, this Court does not propose to foreclose the rights of the assessee on the said ground since it is pleaded that the facts are identical and the assessee ? Shanmugapriya is also a member of the very same family, which was the subject matter of the same search operations. Therefore, we are of the considered view that one more opportunity should be granted to the assessee to go before the Assessing Officer to do the reconciliation by offering an explanation, which has been stated in these appeals as well as in the said miscellaneous petition before the Tribunal. 12. For the above reasons, TCA.No.82 of 2019 is allowed, the order passed by the Tribunal is set aside and the matter is remanded to the Assessing Officer to afford an opportunity to the assessee to reconcile the quantum of jewellery. The Assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arned counsel for the petitioner would submit that there is a merger of the order passed by the 1st respondent Assistant Commissioner on 29.10.2019 and therefore, there is no scope for invoking Section 263 of the Income Tax Act, 1961 to revise the assessment. 14. The learned counsel for the petitioner has placed reliance on the following decisions: (i) Principal Commissioner of Income-tax, Assam Vs. Oil India Ltd., [2019] 103 taxmann.com 339 (Gauhati); (ii) Commissioner of Income Tax (Exemption), Mumbai Vs. Slum Rehabilitation Authority, [2019] 107 taxman.com 18 (Bombay) and (iii) Commissioner of Income-tax-III Vs. Sanvijay Rolling & Engg. Ltd., [2022] 137 taxmann.com 123 (Bombay). 15. The learned counsel for the petitioner has drawn attention to the explanation 1(c) to Section 263(1) of the Income Tax Act, 1961 and submits that the orders that were passed earlier on 23.09.2014 merged with the order of the Commissioner of Income Tax (Appeals) as also with the order dated 03.07.2019 of this High Court and therefore, there is no scope for invoking Section 263(1) of the Income Tax Act, 1961. 16. It is submitted that the 2nd respondent failed to note....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r is an irrelevant factor and therefore prays for dismissal of the Writ Petition. 25. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondents. 26. The petitioner declared a huge quantity of 101442.5 gms of gold jewellery at the time of VDI Scheme, 1997. The jewellery that was found during search operation on 18.08.2011 was at the petitioner's son's residence, viz., R.Sabapathy's residence. 27. The issue that arises for consideration is whether there was a merger of facts and whether merger is a relevant factor for not invoking the power under Section 263 of the Income Tax Act, 1961. 28. Sub-Clause (c) to explanation (1) to Section 263 of the Income Tax Act, 1961 reads as under: "263. Revision of orders prejudicial to revenue. [Explanation 1.]-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, (c) where any order referred to in this subsection and passed by the Assessing Officer had been the subject matter of any appeal 5 [filed on or before or after the 1st day of June, 1988], the powers of the 1 [Princip....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erved that if due to an erroneous order of the Income Tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. However, only in a case where two views are possible and the Assessing Officer has adopted one view, such a decision, which might be plausible and it has resulted in loss of Revenue, such an order is not revisable under Section 263. 7.3 Applying the law laid down by this Court in the case of Malabar Industrial Co. Ltd. (supra) to the facts of the case on hand and even as observed by the Commissioner, the order passed by the Assessing Officer is erroneous as well as prejudicial to the interest of the Revenue. Having gone through the assessment order as well as the order passed by the Commissioner of Income Tax, we are also of the opinion that the assessment order was not only erroneous but prejudicial to the interest of the Revenue also. In the facts and circumstances of the case, it cannot be said that the Commissioner exercised the jurisdiction under Section 263 not vested in it. The erroneous assessment order has resulted into loss of the Revenue in the form of tax. Under the Circumsta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order of the Tribunal allows the Revenue's appeal. The High Court had merely remitted the case back to the respondent. Therefore, the decisions cited by the learned counsel for the petitioner are not relevant for allowing this Writ Petition. In the facts of the case, it cannot be said there is no merger as has been argued. 37. Prima facie, the consequential order indicates that the said order dated 29.10.2019 is erroneous and is prejudicial to the interest with the Revenue warranting invocation of Section 263 of the Income Tax Act, 1961 as there is no proper reasoning and proper application of mind. 38. Thus, there is no comparison between the case of the petitioner and petitioner's co-sister Shanmugapriya's case, who succeeded before the Tribunal in I.T.A.No.357/Mds/2016 for the same assessment year. There, the Tribunal vide its final order dated 15.07.2016 was of the view that when the assessee's mother-in-law late Smt.Prema had declared 3650 grams of gold jewellery under VDI Scheme, the Assessing Officer was expected to give credit to the extent of 3605 grams of gold in the hands of the petitioner's co-sister out of 6136.90 gms of unaccounted gold found....