TMI Blog2014 (12) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... b and Haryana High Court] it has been held that the AO did not undertake verification of closing stock and purchase and did not check the books of accounts - where the assessee is following the mercantile system of accounting took the interest as liability, when there was no evidence that such liability has accrued during the year, but such liability had been allowed by the AO it is a case where the deduction has been wrongly allow the jurisdiction u/s. 263 was justified - the similar issue has been decided in Malabar Industrial Co. Ltd v. CIT [2000 (2) TMI 10 - SUPREME Court] - the AO has not made enquiry and he has not applied his mind - Section 22A is similarly to Section 263 of the Income Tax Act - on the ground that the AO has jurisdiction to include the turn over by revising the assessment or reopening the assessment order – Decided against assessee. - ITA No. 105/PNJ/2012 - - - Dated:- 28-11-2014 - Shri P. K. Bansal And Shri D. T. Garasia,JJ. For the Appellant : A. A. Kulkarni, Adv. For the Respondent : Nishant K., Ld. DR. ORDER Per: D. T. Garasia (JM) This appeal has been filed by the assessee against the order of CIT-Belgaum, dated 5th October, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Farmers Fertilizers Co-op Ltd) and claimed the said income as exempt from tax in the statement of computation of income. The assessee did not give any reason for claiming the dividend income of ₹ 62,18,000/- as exempt. The Assessing Officer failed to examine as to how the dividend income was received by the Co-operative Bank was exempt from the tax under what provisions of the I.T. Act. 1961. There was lack of examination and lack of application of mind by the Assessing Officer, the Assessing Officer has not considered the provisions of Section 80P(4) of the IT Act 1961 which was applicable from1.4.2007 on account of which the provisions of Section 80P was not applied in the relation to any Co-operative Bank, therefore, show cause notice was given. The assesse was given show cause notice and assessee has replied to show cause which read as under: With reference to the above mentioned noticed u/s 263 informing about the erroneous order and prejudicial to the interest of revenue and asking us to show cause why not the order be set aside or modified. Sir with 80P deduction withdrawal since Asst. Year 2008-09 we have been paying advance tax and the tax due on the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inate and correct any errors therein. But if there is an escaped turn over the Commissioner has no power to revise the order because the order is purely the revisional jurisdiction. He relied upon the decision of Hon ble High Court of Mysore at Bangalore in the case of Rallis India Limited v. The State of Mysore 16 STC 130 (Mys). The Learned AR submitted that the decision of Hon ble Karnatka High Court at Bangalore in the case of Bidar Sahakar Sakkare Karkhane Ltd. vs. The State of Karnataka wherein it has held that the revisional power cannot be exercised in respect of a matter which falls within the power of reassessed the escaped turnover. The revising authority, in other words, should not trench upon the powers which are expressly reserved to the assessing authority under section 12-A of the Karnataka Sales Tax Act, 1957. The Deputy Commissioner, in exercise of his revisional jurisdiction, should not ignore that limitation. If the record reveals no application of mind by the assessing authority in respect of a part of the turn over, then it must be deemed to have escaped assessment. It would therefore be a clear case falling within the exclusive jurisdiction of the assessing au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revision of orders prejudicial to Revenue:- 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. Section 80P(2)(d) in respect of any income by way of interest or dividend derived by the Co-operative Society from this investment with any other Co-operative Society whole of such income is exempted. Section 80P(iv) which read as under: . 80P(2)(d):-in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income is exempted. From this above bare reading of this section the section says that the provisions of Section 80P will not apply in relation to the Co-operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT vs. Madras Electrical Conductors 341 ITR 155 (Mad) and in correct exemption of fact or not in correct the application of law would constitute and error capable of conferring the jurisdiction u/s. 263. Such error should be taken as arising out of non application of mind on the part of Assessing Officer. In the case of Malabar Industries Co. Ltd. vs.CIT, 243 ITR 83 wherein it is held that non enquiry where it is required, Court constitutes an error on face of in reference to non application of mind so as to justify revisional jurisdiction. We find that the issue in controversy is covered by the decision o f Supreme Court in the case of Malbar Industrial Company Ltd. vs. Commissioner of Income Tax 243 ITR 83 wherein the Supreme Court has held that a bare reading of this provisions makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner suo motu under it, it is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interest of the Revenue. 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 int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts, the conclusion that the order of the Income Tax Officer was erroneous is irresistible. We are, therefore, of the opinion that the High Court has rightly held that the exercise of the jurisdiction by the Commissioner u/s. 263(1) was justified. The second contention has to be rejected in view of the finding of fact recorded by the High Court. It was not shown at any stage of the proceedings that the amount in question was fixed or quantified as loss of agricultural income and, admittedly, it is not so found by the Tribunal. The further question whether it will be agricultural income within the meaning of sec. 2(1A) of the Act as elucidated by the Court in CIT Vs. Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC) does not arise for consideration. It is evident from the order of the High Court that the findings recorded by the Tribunal that the appellant stopped agricultural operation in November ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
