TaxTMI 
TaxTMI 
2024 (2) TMI 1150
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....ibunal. The appeal filed by assessee was delay of 8 days on following reasonable grounds. 1. That local chartered account of appellant had send the documents and order to Adv, Rajendra Jain, Jodhpur for preparation and filing of appeal before Tribunal. 2. That due to serious medical condition of father of Adv, Rajendra Jain, he had to rush to Jaipur for his father's treatment and subsequently he was expired. That due to such unavoidable reason, there was delay in filling of appeal. 3. The Hon'ble Delhi High Court's decision in case of HL Malhotra & Company Pvt. Ltd. Vs DCIT, Circle 12, New Delhi (ITA No. 211/2020 & CM Appeals 32045-32047/2020 dated 22nd December, 2020) wherein delay of 498 days in filing was condoned by the Hon'ble Delhi High Court and it was held that in absence of anything male fide or deliberate delay as a dilatory tactic, the Court should normally condone the delay as the intent is always to promote substantial justice following the Hon'ble Supreme Court decisions in the case of Collector, Land Acquisition, Anantnag & Anr. Vs Mst. Katiji and others (1987) 2 SCC 107 and N. Balakrishnan Vs M. Krishnamurthy 1998 (7) S....
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....s 263 passed by the, ld. PCIT, Udaipur is bad in law and without jurisdiction. 2. That on the facts and circumstances of the case the ld. PCIT, Udaipur grossly erred in issued notice u/s 263 of the Act as same was issued without conducting basic enquiry as per law. 3. That on the facts and circumstances of the case the ld. PCIT, Udaipur erred in not recording own satisfaction in respect of assessment order passed by the ld. AO is erroneous so as it prejudicial the interest of revenue as per provision of section 263 of the Act. 4. That on the facts and circumstances of the case the ld. PCIT, Udaipur grossly erred in holding the order of the AO is erroneous and prejudicial to the interest of the revenue by treating the inquiry in the wake of a notice under section 263 is just an empty formality. 5.That on the facts and circumstances of the case the ld. PCIT, Udaipur grossly erred in not considering the provisions of the law and law decided by Hon'ble courts in right prospective and judicious manner. 6. That on the facts and circumstances of the case the ld. PCIT, Udaipur grossly erred in setting aside the assessment order passed by the u/s....
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....s 80P by the assessee includes interest received from Udaipur Central Co-operative Bank Rs. 80,62,620/- and Udaipur Mahila Urban Co-operative Bank Rs. 1,10,876/-, which were not allowable as per provisions of section 80P(2)(d) of the Act. Since no such disallowance has been made by the AO the assessed income has been under computed/assessed by this amount of Rs. 81,73,496/-. 5.2 In view of the facts, as categorically mentioned above it was clear that the AO (FAO in this case) had failed to examine the issues of disallowance u/s 80P(2)(d) of the IT. Act, 1961. Therefore, due to lack of enquiry and also due to incorrect and incomplete appreciation of facts and also the incorrect application of law, the assessment order duly passed u/s 143(3) of the IT Act on 15.01.2021 for the A.Y. 2018-19 is erroneous insofar as it is prejudicial to the interest of revenue. Therefore, the order was proposed to be suitably modified/enhanced/cancelled by invoking the provisions of the section 263 of the I.T. Act, 1961. The ld. PCIT before doing so a notice u/s 263 of the Act was duly issued on 30.01.2023 to the assessee, for giving an opportunity of being heard as well as requiring the assessee to ....
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....s considered but not found acceptable because only by registration with the Rajasthan Co-operative Society Act IV of 1953, the Co-Operative Bank is not treated as a Co-operative Society. As per part V of Banking Regulation Act, 1949 "Co-operative bank means a "state co- operative bank, a central co-operative bank and a primary co-operative bank" and "Co-operative society" means "a society registered or deemed to have been registered under any Central Act for the time being in force relating to the multi-State co- operative societies, or any other Central or State law relating to co-operative societies for the time being in force. As per part V of Banking Regulation act, 1949 a co- operative bank is different from the cooperative society. (iv) The assessee relied upon the decision of the ITAT, Jaipur in which reference to the judgement of Hon'ble Karnataka High Court in the case of Pr. CIT Vs The Totagars Co-operative Sale Society (2017) 392 ITR 74, wherein it held that Co- operative Bank would be included in the words "co-operative society has been made It is seen that the deduction u/s 80(P)(2)(d) has been claimed on "interest" received from Co-opera....
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....ank. (vi) As per sub section 4 of section 80P of the Income Tax Act, the provisions of this section shall not apply in relation to any co- operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. As per sub section 4 of section 80P a Co-Operative Bank is not a co-operative society and provisions of section of this section is not applied on it. (vii) As the said interest income was received by the assessee from other than the cooperative society, hence Provisions of section 80P(2)(d) was not applicable in this case. Consequently, deduction u for Rs. 81,73,496/-(80,62,620+1,10,876) was not allowable to the assessee and hence, the same was required to be disallowed and added to the total income of the assessee. However, such amount was not disallowed by the Assessing Officer while completing the assessment u/s 143(3) of the Act, on 15.01.2021. In this case, the AO allowed deduction u/s 80P(2)(d) on the interest income received from Co-operative Banks. The AO has thus erred in allowing the deduction u/s 80(P)(2)(d) on such interest income, 7. Considering the above facts, it is held that....
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....ry by the Income-tax Officer. The Commissioner has found that the Income-tax Officer has omitted to enquire into this question found by the Commissioner implicit in the manner in which the amounts were borrowed and advanced by the assessee- company. (Duggal & Co. v. CIT [1996] 220 ITR 456 /[1994] 77 Taxman 331 (Del.)) 1.2. There can be no doubt that merely on the basis of presumption or surmise or suspicion, an order under section263 cannot be passed. The Tribunal faited to appreciate that in this case the inference drawn by the Commissioner was not based either on presumptions or surmises or suspicion. Therefore, the Tribunal was not justified in setting aside the order of the Commissioner. (PCIT v. India Finance Ltd (2016) 389 ITR 242 (2017) 81 taxmann.com 135 (Cal.)) 1.3. It is the order of the PCIT/CIT which is in challenge before the Hon'ble Tribunal The appellant is required to show and prove the "reasons to interfere with the order of the PCIT/CIT It is not proven by the assesse that the opinion of the PCIT is based on either presumptions or surmises or suspicion, It is not proven by the assesse that the opinion of the PCIT is malafide or without jurisd....
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.... been examined and not because there is anything wrong with his order if all the facts stated or claim made therein are assumed to be correct. The Commissioner may consider an order of the Assessing Officer to be erroneous not only when it contains some apparent error of reasoning or of law or of fact on the face of it but also when it is a stereo-typed order which simply accepts what the assessee has stated in his return and fails to make enquiries or examine the genuineness of the claim which are called for in the circumstances of the case. Supported by the decisions of the Hon'ble Supreme Court in Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84. Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC), and Malabar Industrial Co Ltd 's ([2000] 243 ITR 83 (SC)) 3.2. The Apex Court in Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) laid down a four-way test for orders being erroneous in-so-far as they are prejudicial to the interest of the revenue, liable for revision, viz incorrect application of law, wrong assumption of facts, non-observance of the principles of natural justice, and lack of inquiry. The Hon'ble Supreme Court in the instant case held that....
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....warranted. The Commissioner will be well within his powers to regard an order as erroneous and prejudicial to the interest of the revenue. (Dr. Rabindra Kumar Singh vs. CIT (Central), Patna [2011] 131 ITD 39 (Ranchi)) 3.6. Where assessee explained source of cash deposit in its savings account as received from closure of previous loans given by him but same was not substantiated with any record or evidence, Principal Commissioner was justified in making revision of assessment order under section 263. (AvathanMarimuthuVs Assistant Commissioner of Income tax, Circle-III, Trichy, the Ho'ble ITAT Chennai Bench 'C', [2017] 84 taxmann.com 104 (Chennai - Trib)) 3.7. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word "erroneous" includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on ments (ITO versus DG Housing Projects Limited. (2012) 343 ITR 329 (Delhi)) 3.8. The assessee claimed provision made for standard assets also as a provision for bad and doubtful debts under section 36(1)(....
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....t)] 4.2. Non-application of mind is a ground for interference under Section 263 in the case of CIT v. Shri Bhagwan Das. (2005) 272 ITR 367 (All) the Division Bench opined that exercise of power under Section 263 was proper when there was no discussion regarding the question as to whether the amount of income shown by the assessee which was claimed to be exempted had actually been earned by him and whether the entire amount of income from agriculture and Poultry Farming was exempted from tax (Gauhati High Court in the case of CIT v. JawaharBhattacharjee [2012] 24 taxmann com 215/209 Taxman 174) 4.3. The assessee claimed depreciation on goodwill and operational expenses The Principal Commissioner invoked the provisions of section 263 of the Act on the ground that the Assessing Officer had not discussed and veified the claim of the assessee. On appeal, the assessee contended that the Assessing Officer had raised specific enquiries during the course of assessment proceedings and accepted its claim and it was not necessary to discuss about the enquiries made by the Assessing Officer in the assessment order. Held that the Assessing Officer had not discussed the issues t....
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.... examined by the assessing authority, the power under section 263 can be invoked. (CIT v. Emery Stone Mig Co. [1995] 213 ITR 843/83 Taxman 643 (Raj.)) 5.3. Merely asking a question which goes to the root of the matter and not carrying it further is a case of non-enquiry. it the query not otherwise satisfied while responding to another query In the instant case, the Assessing is Officer raised query regarding valuation of shares in question to which response was only that the unquoted shares were valued at costs. No method of valuation of the shares was submitted to the Assessing Officer during the proceedings, leading to the assessment order It, therefore, appeared that the Assessing Officer after having asked a pertinent question of the method of valuing unlisted shares did not pursue that line of enquiry. Thus, this was a case of non-enquiry and not inadequate enquiry. Therefore, the order of the Assessing Officer was certainly erroneous and prejudicial to the revenue. (Jeevan Investment & Finance (P) Ltd. Vs Commissioner of Income Tax, City-1. Mumbai, [2017] 88 taxmann.com 552 (Bombay)) 5.4. The Commissioner can regard the order as erroneous on the ground that ....
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....re was no infirmity in order of Commissioner directing re-examination of claims on merits. (Babulal S. Solanki v. ITO (2019) 176 ITD 642 104 taxmann.com 155 (ITAT Ahmedabad)) 5.8. The assessee had made payments to small labourers and machine repairers for which it did not have any valid vouchers. During the assessment proceedings it was stated before the Assessing Officer that the payments were made under emergent conditions and that the expenses were actually incurred. The Assessing Officer disallowed a sum of Rs. 2 lakhs, which disallowance was accepted by the assessee The CIT exercised revisionary powers under section 263 and directed the Assessing Officer to modify the assessment order since according to the CIT the 4 aspects mentioned in his notice were not considered by the Assessing Officer. Tribunal set- aside the order of the CIT. On appeal by the department, the High Court observed that there was no application of mind on the part of the Assessing Officer and that the 4 points mentioned by the CIT have not been considered by the Assessing Officer. Accordingly, the High Court allowing the appeal held that the CIT was justified in directing the Assessing Officer to....
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....at order would be erroneous in so far as it is prejudicial to the revenue if it was passed without making any inquiries or verification which should have been made by the Assessing Officer 7.3. The amendment to section 263 of the Act by insertion of Explanation 2 to Section 263 is declaratory in nature and is inserted to provide clarity on the issue as to which orders passed by the AO shall constitute erraneous and prejudicial to the interest of Revenue whereby it is provided, inter-alia, that if the order is passed without making inquiries or verification by the AO which, should have been made or the order is passed allowing any relief without inquiring into the claim, the order shall be deemed to be erroneous and prejudicial to the interest of Revenue. (Anuj Jayaendra Shah vs PCIT-35. Mumbai [2016] Reported in 67 taxmann.com 38) The ratio of above noted judgments is clearly attracted on the facts of the present case at hand Also, it is apparent that the relevant issues, as discussed above were not properly examined during the course of assessment proceeding by the Assessing Officer The assessment order was passed by the Assessing Officer without making proper in....
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....eduction u/s 80P claimed during the year under consideration, kindly submit the below specified details: 1. Detailed note on nature of business activities carried out by the Co- operative Society during the year as well as during last three years. 2 Detailed computation of total income. 3. Calculation of amount of deduction and note on eligibility of deduction uls 80P of the Act 4. Please give details whether the entity falls under the category of Co- operative Bank or was constituted under Part V of the Banking Regulation Act, 1949. 5. Detailed note on objectives of the entity. 6. Bifurcation of income earned under the different heads. 7. The details of other deductions claimed, If any. 8. Justification how the interest income earned from a banking company is eligible for deduction u/s 80P of the Act. From the above notices issued by the ld. FAO it is evidently clear that the ld. FAO has raised the issue on hand and has allowed the claim of the assessee after applying his mind on the issue. Thus, the contention of the ld. PCIT is nothing but making the review of the assessment under taken by the ld. FAO and....
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....under Section 263 is wide and is meant to ensure that due revenue ought to reach the public treasury and if it does not reach on account of some mistake of law or fact committed by the AO, the CIT can cancel that order and require the concerned AO to pass a fresh order in accordance with law after holding a detailed enquiry. But when enquiry in fact has been conducted and the AO has reached a particular conclusion, though reference to such enquiries has not been made in the order of the assessment, but the same is apparent from the record of the proceedings, in the present case, without anything to say how and why the enquiry conducted by the AO was not in accordance with law, the invocation of jurisdiction by the CIT was unsustainable. As the exercise of jurisdiction by the CIT is founded on no material, it was liable to be set aside. Jurisdiction under Section 263 cannot be invoked for making short enquiries or to go into the process of assessment again and again merely on the basis that more enquiry ought to have been conducted to find something. 12. The finding of the Tribunal that the ITO had passed assessment order after relevant enquiries and considering the aspects....
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....aken by the Assessing Officer is unsustainable in law. 11. Even a bare reading of clause (a) to the Explanation 2 of Section 263(1) enables a deeming fiction for the CIT to treat the order of AO erroneous in so far as prejudicial to the interest of revenue if in the opinion of CIT the order is passed without making inquiry or verification which should have been made. This again substantiates that the assessee challenging the validity of Sec 263 is completely valid as in the present case the assessment order was passed after making due enquiry as well as verification from the assessee hence the CIT has no power to invoke the power provided under section 263 of the Act. 12. Considering the totality of the facts and circumstances of the case, legal position as well as judicial pronouncements, we found merit in the contention of ld. AR, therefore we quash the order passed by ld. PCIT under section 263 of the Act. In the result, the appeal of the assessee is allowed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. ============= Document 1 Copy of show cause notice issued u/s 263 of the Act.....