TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 753
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....r the Assessment Year 2016-2017. The case was selected for scrutiny through CASS and accordingly the assessment under section 143(3) of the Income Tax Act, 1961 was completed on 28.12.2018. The Revenue Department initiated the revision proceeding against the order passed by the Assessing Officer on the ground that it is erroneous and prejudicial to the interest of Revenue. It was alleged that certain properties were sold by the assessee by showing lesser value than the value, which was assessed for the purpose of payment of stamp duty and it was contended that short levy of tax was made of Rs. 3,66,049/-. The revenue contended that the assessee has paid Rs. 9 lakhs on account of commission or brokerage which is deductible under TDS was not deducted. Therefore, wrong assessment of income was made and the disallowance of Rs. 2,70,000/- i.e., 30% of Rs. 9,00,000/- should have been ordered as per section 40(a)(ia) of the I.T. Act. It is stated that the enquiry to ascertain the facts about the issue having not been done by the Assessing Officer and since no addition was made during the course of assessment proceeding, the order of the assessing officer was prejudicial to the interest of....
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....rine of substance over form in respect of transaction with M/s Gangotri Tracon P. Ltd after due verification. (4) To verify the repayment and interest payment of sum of Rs. 6,11,26,848/- & Rs. 47,36,052/- respectively ; (5) To verify applicability of Section 56(2) (vii-b) in respect of shares issued ; (6) To verify the applicability of 43CA in respect of sale deed executed below stamp duty value; (7) To verify the applicability of Section 40A(3) in respect of payment for purchase of land ; 4) Being aggrieved by the Revisional Order passed by the PCIT under Section 263 of the Act in both the revisions, the assessee preferred appeals before the Income Tax Appellate Tribunal. The Tribunal vide its Orders dated 25.10.2021 and 22.10.2021 (challenged in Appeal Nos. 5/2022 & 7/2022 respectively) set aside the order of the PCIT on the ground that the PCIT travelled beyond its statutory mandate and quashed the order passed u/s 263 of the IT Act, 1961. Being aggrieved by such orders, Revenue filed these appeals before this Court. 5) This Court by order dated 12.01.2023 has admitted the appeal (TAXC No.5 of 2022) on the following substantial questions of law : (1) Whether the Inco....
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....aipur Versus Principal Commissioner of Income Tax-1, Raipur decided on 25.10.2016 and would submit that when the order is erroneous on the face of it, the view taken by the Assessing Officer is unsustainable. Therefore, the order of Assessing Officer is not only erroneous but would be deemed to be prejudicial to the interest of revenue. c) he would submit that in any case, the order of reassessment will not prejudice to the interest of the assessee/respondent as he would get complete opportunity to defend them. He would further submit that the assessee has received a sum of Rs. 5,59,31,494/- against the sale of land and unsecured loan and made a repayment to some extent with interest but failed to furnish any document with respect to such transaction made with the above company and the above company was found to be a shell company and the genuineness of the Company having not been established, the sum received should have been disallowed. d) he would next submit that cash credit entry which was found in the books of the assessee is needed to be explained by producing proper documents and having not been done so, the cash credit income should be taken as the income of the assess....
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....he two circumstances specified therein exist. To appreciate the rival contention of the parties, it would be apposite to refer to Section 263 of the Act, relevant portion of which reads as follows: "263. Revision of Orders prejudicial to revenue.-- (1) The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or 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 insofar 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." 10) The Bombay High Court in Commissioner of Income Tax vs. Gabriel India Ltd {(1993) 203 ITR 108 Bom)} held as follows: "The power of suo-motu revision under sub-section (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exis....
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....)} while dealing with Section 263 held as follows: "Jurisdiction under Section 263: The scope of the provisions of Section 263 of the Act is no longer res integra. The power to exercise suo motu power of revision in terms of section 263(1) is in the nature of supervisory jurisdiction and same can be exercised only if the circumstances specified therein, viz., (1) the order is erroneous; (2) by virtue of the order being erroneous prejudice has been caused to the interest of the Revenue, exist." (Emphasis supplied) 13) A reading of the aforesaid principle laid down by the Supreme Court would show that the power conferred to the Commissioner under Section 263 wherein the order is sought to be reviewed is in the nature of supervisory jurisdiction, can be exercised if two circumstances exist viz., (i) the order is erroneous and (ii) by virtue of order being erroneous, prejudice has been caused to the interest of Revenue. If the assessing officer adopts one or two courses available under the law and it results in loss of revenue, then the order cannot be said to be erroneous or prejudicial to the interest of revenue within the meaning of section 263 of the Act. The case of the asse....
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....lent from GTPL was not received in the assessment year in question but was received in earlier assessment year and was duly assessed and most importantly the finding has been recorded that the amount represents opening balance of carried forward credit of an earlier year. Therefore, according to Section 68 of the I.T. Act which operates in the limited field , any sum found credited in the books of assessee maintained for "that previous year" may be charged to income tax as income of the assessee of that previous year, if - (i) the assessee offers no explanation about the nature of source of such sum or (ii) the explanation offered by him in the opinion of the Assessing Officer is not satisfactory. Therefore, the very genesis to invoke the provisions of Section 68 of the Act apparently appears beyond the scope of PCIT as the amount was received from the Company in the financial years 2013-2014 and 2014-2015 which were pertaining to the assessment years 2014-2015 and 2015-2016 respectively. According to the findings recorded by the learned Tribunal, the credit entries appearing in the accounts of the assessee were taken into account and section 68 could not have been invoked for the ....
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....t enormous gap of any valuation and consequently the books were not rejected. Therefore the figures shown therein have to be followed. The valuation report can be taken into consideration when the books of account are not reliable or are not supported by proper vouchers. The assessment year in this case has not doubted such entry and it has not been stated that the books of account maintained by the assessee are defective or not reliable. It may have marginal difference with the valuation but that may be for various reasons but primarily aforesaid two conditions are required to be satisfied, which having not been present, the appellate Tribunal has rightly held the issue in favour of the assessee. 17) The Tribunal also recorded the fact that the so called incriminating information that the lender company being classified by the SEBI as shell Company coupled with some adversarial statement of one Amit Kumar Kedia which has been relied by the PCIT post assessment, were not supplied to the assessee despite requests made by him that those information and statement would enable him to place its defence. Therefore, a serious flaw was committed by the PCIT. The assessment order also reco....