TMI Blog2015 (1) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudicial to the interest of the Revenue. We, therefore, dismiss the appeal filed by the Assessee by upholding the order passed u/s 263. - Decided against assessee. - ITA NO. 51/PNJ/2012, ITA NO. 52/PNJ/2012 - - - Dated:- 31-10-2014 - SHRI P.K. BANSAL AND SHRI D.T. GARASIA, JJ. For The Assessee : Vishal Kalra, Adv. For The Revenue : Smt. Asha Desai, DR ORDER PER P.K. BANSAL 1. ITA NO. 51/PNJ/2012has been filed against the order of CIT dt. 20.3.2012 passed u/s 263 by taking the following effective grounds of appeal : Based on the facts and circumstances of the case, Gigabyte Technology (India) Private Limited; (hereinafter referred to as the Appellant ), respectfully submits appeal on the following grounds, with respect to the order passed by the learned Commissioner of Income-Tax, Panaji-Goa ( CIT ) under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ): 1. That on the facts and circumstances of the case and in law the impugned order dated March 20, 2012 passed by the CIT under section 263 of the Act is beyond jurisdiction, bad in law and void ab initio. 2. That the CIT erred on fact and in law in exercising re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant and using only the current year (ie financial year 2005-06) data for computation of arm s length price. f. The learned AO erred in not accepting the arm s length price determined by the Appellant, and in choosing to determine the arm s length price by making reference to the TPO even though none of the conditions laid down under section 92C(3) of the Act, were satisfied. The above grounds are independent and without prejudice to each other. 3. Since both the appeals relate to the same Assessee, for the sake of convenience both these appeals are decided by this common order. ITA NO. 51/PNJ/2012 : 4. There is delay of 8 days in filing this appeal. The Assessee has filed application for condonation of delay relying on the decision of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji, 167 ITR 471 (SC). After hearing the rival submissions, we are of the view that the Assessee has been prevented by sufficient cause to file the appeal within the stipulated time. There is delay of only 7 days. We, therefore, condone the same. 4.1 This appeal has been filed by the Assessee against the order of CIT passed u/s 263. The Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37 (P H). It was also contended that the jurisdiction u/s 263 is not to set aside unfavourable order. It was also contended that the provisions of Sec. 144C are similar to the provisions of erstwhile provisions of Sec. 144B. Courts in the context of Sec. 144B of the Act have held that merely because the procedure laid down in Sec. 144B of the Act has not been followed, the same would not suffice to exercise revisionary powers available to the CIT u/s 263 of the Act. Reliance was placed on the following decisions : i) Krishnamurthy (V.G.) vs. CIT, 152 ITR 683 (Kar) ii) Maharaja Raja PawerDewas (H.H.) vs. CIT, 138 ITR 518 (MP) iii) NandlalBhandari and Sons vs. CIT, 147 ITR 710 (MP) CIT after considering the submission of the Assessee noted that records showed that the AO has not provided draft assessment order to the Assessee before passing order u/s 143(3). As per provisions of Sec. 144C of the Income Tax Act as enacted and inserted by the Finance Act, 2009 w.e.f. 1.4.2009 the draft assessment order has to be mandatorily provided to the Assessee before passing order u/s 143(3) of the Income Tax Act for raising its objections before the Dispute Resolution Panel and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the AO was illegal and without jurisdiction, reliance was placed on the decision of the Hon'ble Andhra Pradesh High Court in W.P no. 5557 of 2012 in the case of Zuari Cement Ltd. vs. ACIT. Reliance was also placed in this regard on the order passed in W.P no. 1526 1527 by the Hon'ble Madras High Court in the case of Vijay Television Pvt. Ltd. vs. ACIT. It was also pointed that the Special Leave Petition has been dismissed by the Hon'ble Supreme Court vide order dt. 27.9.2013 in the case of ACIT vs. Zuari Cement Ltd. arising out of W.P no. 5557 of 2012 of the Hon'ble Andhra Pradesh High Court. It was contended that the Assessee has filed an appeal before the CIT against the assessment order on 31.3.2011 and the CIT immediately invoked the jurisdiction u/s 263 by issuing notice dt.23.2.2012 to the Assessee. For exercising jurisdiction u/s 263 both the conditions that the order is erroneous and prejudicial to the interest of the revenue must be satisfied. In this case, the order was not prejudicial. Unless and until both the conditions are satisfied, CIT could have not exercised jurisdiction u/s 263. Reliance was placed in this regard on the decision of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On or before October 30, 2010 September 23, 2013 Final assessment order On or before December 30, 2010 October 17, 2013 Thus, it was contended that the sole purpose of invoking the provisions of Sec. 263 is to extend the time limit for passing order. CIT does not have any power to extend the time limit. Reliance was placed in this regard on the decision of the Chennai Bench of this Tribunal in the case of Shri V Narayanan vs. ACIT [2010] 2 ITD 446 (Chennai) and it was vehemently contended that there cannot be any prejudice to the revenue as the AO completed the assessment proceedings after applying his mind and assessed the income of the Assessee at an amount which was much higher than returned income. Thus, there was no action of the AO that caused any prejudice to the interest of the Revenue. 4.3 We noted that the CIT in this case has called for the records and noted that the AO before passing the order u/s 143(3) has not sent any draft assessment order to the Assessee as is required u/s 144C of the Income Tax Act as inserted by the Finance Act, 2009 w.e.f. 1.4.2009 so that the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of or to give effect to, any finding or direction contained in an order of the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f there is incorrect assumption of facts or incorrect application of law in the order by the A.O. If the A.O. after making the enquiries and examining the records taken one of the possible view, it cannot be said that the order passed by the A.O. was erroneous. This view has been taken by Hon?ble Supreme court in the case of Malabar Industrial Co. Ltd. 243ITR83(SC). 4.7 Now, the ld. AR before us no doubt vehemently argued that in the absence of compliance of the provisions of Sec. 144C(2), which is undisputed in this case, by the AO by not providing time to the Assessee to file its objection with the Dispute Resolution Panel makes the order passed by the AO to be illegal and void ab initio and in this regard he placed reliance on the decision of Hon'ble Kerala High Court in the case of P. Abdul Kadar Hamza vs. CIT, 246 ITR 14 (supra) and Hon'ble Andhra Pradesh High Court in the case of Zuari Cement Ltd. as well as Hon'ble Madras High Court in the case of Vijay Televisions Pvt. Ltd. vs. ACIT (supra). We have gone through these decisions. We noted that in these decisions, the respective Assessees have filed Writ Petitions before the High Court as the AO has passed ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee because in that case the Tribunal has held that the order passed u/s 147 was invalid. We find substance in the submission of the ld. AR that both the provisions as laid down u/s 144B and as are inserted u/s 144C by the Finance Act, 2009 are having similar language but we noted that the various High Courts have held that the assessment is not invalid and void if the provisions of Sec. 144B are not complied with. The various High Courts in the following decisions have taken a view that the provisions of Sec.144B are procedural in nature. i) AngadBai vs. CIT, 163 ITR 871 (MP) ii) CIT vs. Shree Digvijay Woollen Mills Ltd, 212 ITR 310 (Guj) iii) Vishwanath Prasad Bhagwati Prasad vs. CIT, 202 ITR 469 (All) In this decision the Hon'ble Allahabad High Court under which the Income Tax Tribunal, Allahabad Bench jurisdiction falls has categorically held that the provisions of Sec. 144B are procedural in nature and non-compliance thereof would be a procedural lapse and it will not make the assessment to be void. iv) Sarbjit Singh vs. CIT, 109 CTR 454 (Del) v) G.R. Steel and Alloys Pvt. Ltd. vs. CIT, 152 ITR 220 (Kar) vi) Joseph Kuruvilla vs. CIT, 179 ITR 139 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be re-done from the stage at which the irregularity is committed. We, therefore, do not agree with the ld. AR on this contention. The ld. AR even though alleged before us that the CIT invoked jurisdiction u/s 263 to set right the mistake and to safeguard the interest of the Revenue on the basis of the proposal submitted by the AO to the CIT and CIT therefore did not apply his own mind, we do not agree with the ld. AR on this count. In our opinion, once an allegation is alleged, the onus is on the Assessee to prove that the jurisdiction u/s 263 has been invoked at the behest of the AO. The onus, in our opinion, lies on the Assessee to prove that the apparent is not real and jurisdiction u/s 263 has been invoked by the AO and not in reality by the CIT. We noted that the CIT has issued notice u/s 263(1) and given due opportunity to the Assessee. It is the CIT who has passed the order us/ 263, not the AO. Non-compliance of the provisions of Sec. 144C(2) itself, in our opinion, proves that AO has committed error in not complying with the provisions of the Income Tax Act. If the assessment is held to be non-est in the absence of non-compliance there would be prejudice to the interest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Income-tax Officer had proceeded to finalise the assessment instead of sending the papers to the Inspecting Assistant Commissioner in terms of section 144B(4) and what was breached was only the assessee s statutory right to be heard by the Inspecting Assistant Commissioner and there was no violation of principles of natural justice. Section 144B dealt with the procedure for assessment and that provision did not confer a substantive right on the assessee to treat the entire assessment proceeding as a nullity but on account of the Income-tax Officer having proceeded to make the order which was found to be unsustainable on account of lack of jurisdiction in the officer, the assessment could not be finalised within the period of limitation prescribed under section 153 and in view of lapse of over sixteen years the assessment was barred by limitation. In CIT vs. Ratanabai N.K. Dubhash (Mrs.), 230 ITR 495 the Hon'ble Bombay High Court has held as under : Held, accordingly, that the admitted position was that on receipt of the draft order of assessment, the assessee did file objections and the Income-tax Officer completed the assessment himself on the basis of the draft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision cannot be invoked to correct each and every type of mistake or error committed by the assessing officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interest 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 the order of the assessing officer cannot be treated as prejudicial to the interests of the revenue. For example, if the assessing officer has adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the assessing 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 assessing officer is unsustainable in law. Where a sum not earned by a person is assessed as inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both conditions by the CIT that the order passed by the AO is erroneous as well as prejudicial to the interest of the Revenue. We, therefore, dismiss the appeal filed by the Assessee by upholding the order passed u/s 263. ITA NO. 52/PNJ/2012 : 5. After hearing the rival submissions and going through the grounds of appeal of the Assessee, we noted that the Assessee has taken various grounds on merit before the CIT(A) as per form 35, copy of which is filed before us, but the CIT(A), we noted, as argued by the ld. AR, has not decided these grounds on merit as CIT(A) noted that the assessment framed by the AO has already been set aside by the CIT by invoking jurisdiction u/s 263 and therefore he took the view that the appeal filed by the Assessee on these grounds have become infructuous. We have already confirmed the order of CIT in ITA No. 51/PNJ/2012 in the preceding paragraphs. In view of this, since the assessment has already been set aside and the AO has been directed by the CIT to re-frame it afresh after giving opportunity to the Assessee and after considering Assessee?s explanation and all relevant material in accordance with law, therefore, we agree with the CIT(A) and ..... 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