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2015 (12) TMI 696 - ITAT HYDERABAD

2015 (12) TMI 696 - ITAT HYDERABAD - TMI - Revision u/s 263 - CIT(A) revising the assessment order passed under section 143(3) read with section 153C for the respective assessment years - Held that:- We find that the assessee has given the venture-wise details of income from land along with the name of the party, the document no. and the consideration received and recorded in its books of account for all the relevant assessment years under consideration. We find that the assessee has filed all t .....

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nd since the report is silent about it, the same cannot be relied upon. He observed that the sale consideration as per the registered sale deeds is declared by the assessee company and therefore, the same is assessed in its hands as it is voluntarily declared by the assessee company and protective assessment in the hands of the respective assignees has already been made. It was, after considering these aspects, that the A.O. estimated the income of the assessee. This itself clearly demonstrates .....

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iples as to the exercise of jurisdiction of the CIT under section 263 of the Act.Applying the above principles to the facts of the case before us as brought out in detail in the above paragraph, we hold that the assessment order under section 143(3) read with section 153C could not be revised under section 263 of the Act. - Decided in favour of assessee. - ITA.No. 584/H/2015, 585/H/2015, 586/H/2015, 587/H/2015, 588/H/2015 & 589/H/2015 - Dated:- 4-12-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER A .....

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estate and investment activity. There was a search and seizure operation under section 132 of the I.T. Act in the case of M/s. MBS Jewelers P. Ltd., and its group on 11.03.2010. During the course of search in the premises of M/s. MBS Jewelers P. Ltd., certain documents relating to the assessee herein were found and seized. These documents were copies of certain sale deeds in which certain payments were shown to have been made in favour of the assessee herein. On perusal of the same, the A.O. obs .....

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me and holding that no clarity was emerging from the transactions, issued a show cause notice dated 01.12.2011 for the special audit under section 142(2A). Assessee filed its objections on 12.12.2011. However, the said objections were set aside and the assessee was directed to get its accounts audited under section 142(2A) of the I.T. Act with M/s. Ratnam Daveji, Chartered Accountants. The Special Auditor submitted his report, but the A.O. observed that none of the issues referred to the Special .....

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refore, the assessment orders were erroneous and prejudicial to the interests of the Revenue. He accordingly, issued a show cause notice dated 17.08.2012 under section 263 of the I.T. Act. In reply thereto, the assessee filed its written submissions stating that the accounts of the assessee were referred for Special Audit under section 142(2A) of the I.T. Act and it is after verifying the information furnished and after taking into consideration the special audit report, that the A.O. completed .....

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is erroneous in so far as it is prejudicial to the interests of the Revenue. The Ld. CIT, accordingly, set aside the assessment order passed under section 143(3) read with section 153C of the I.T. Act for all the assessment years under consideration with a direction to examine all the issues as specified in the order in detail and re-do the assessment after making detailed enquiries and investigation as deemed fit. Against these orders of the Ld. CIT under section 263, the assessee is in appeal .....

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. The other grounds of appeal on which the assessee is seeking adjudication are as under. For the sake of convenience, the grounds of appeal raised in A.Y. 2006-07 are reproduced hereunder: Grounds of Appeal 1. The Ld.Pr.CIT (Central), has erred in passing the order u/s.263 on the ground that the assessment order passed u/s.143(3) rws 153C by the DCIT, Circle-2(1), Hyderabad for the A.Y 2006-07 is erroneous in so far as it is prejudicial to the interests of revenue. 2. … … … .....

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ndustrial Co. Ltd. vs. Commissioner of Income Tax (2000)-243-ITR -0083 - (SC). 6. The Ld.Pr.CIT (Central), ought to have appreciated that as the accounts of the assessee were referred for special Audit U/s 142(2A) and the AO has completed the assessment after verifying all the information furnished. Hence, the assessment order cannot be erroneous in so far as it is prejudicial to the interests of revenue. 7. The Ld.Pr.CIT (Central), ought to have appreciated that as assessment U/s 143(3) rws 153 .....

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of sale and purchase of lands was one of the point of reference and no adverse finding was made by the Special Auditor for such. 10. The Ld.Pr.CIT (Central), ought to have appreciated that the assessee had provided the complete details in respect of Taxation in the hands of legal owners to Special auditor and no adverse finding was made by the Special Auditor after verification of such. 11. The Ld. Pr. CIT (Central), erred in considering that the verification in respect of investment made in lan .....

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ke to submit that as per the ratio laid down by the Honourable Supreme Court of India in the case of National Thermal power Co. Ltd v. CIT (1998) 229 ITR 383 (SC) the IT AT has jurisdiction to examine the question of law which though not arose before the AO but arose before the !TAT for the first time. 15. The Revisionary order passed by the Commissioner of income Tax (Central) u/s 263 of the Act dated 27.03.2015 is erroneous both on facts and in law. 16. … … … 17. … .....

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drawn our attention to the questionnaire issued by the A.O. at the time of the assessment which are placed at pages 1 to 14 of the paper book. He submitted that the very same issues were also referred for special audit under section 142(2A) of the I.T. Act and that the assessee has filed its objections by filing its detailed reasons. The Ld. Counsel for the assessee, has drawn our attention to pages 15 to 19 of the paper book, in support of its contention that the Special Auditor has also issue .....

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s it is prejudicial to the interests of the Revenue and hence, it was not revisable under section 263 of the I.T. Act. 4. The Ld. D.R., on the other hand, supported the order of the Ld. CIT (Central) for all the relevant assessment years. 5. Having regard to the rival contentions and material on record, we find that an assessment order can be revised under section 263 of the Act by the CIT only if the assessment is erroneous in so far as it is prejudicial to the interests of the Revenue. Both th .....

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company was real estate and investment activity. The details as regards its income was also mentioned in the said reply. From pages 11 to 14 of the paper book, we find that the assessee has given the venture-wise details of income from land along with the name of the party, the document no. and the consideration received and recorded in its books of account for all the relevant assessment years under consideration. We find that the very same issues were also raised by the Special Auditor in his .....

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ince the issue is critical for assessing the capital gains as arising out of the transfer of land in the correct hands and since the report is silent about it, the same cannot be relied upon. He observed that the sale consideration as per the registered sale deeds is declared by the assessee company and therefore, the same is assessed in its hands as it is voluntarily declared by the assessee company and protective assessment in the hands of the respective assignees has already been made. It was .....

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Hyd. (2013) 36 taxmann.com 348 (A.P.) has considered the judicial precedents on the issue in detail and has culled out the following principles as to the exercise of jurisdiction of the CIT under section 263 of the Act. (a) 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 interests of the Revenue. If one of them is absent - if the order of the Income Tax Officer is erroneou .....

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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 Income Tax Officer is unsustainable in law. (c) To invoke suo motu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous insofar as it is prejudicial to the interests of the Revenue, will not suffi .....

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lowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suo motu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interferenc .....

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egal ingenuity is exhausted. (f) Whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by .....

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Officer and, in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment. 5.1. Applying the above principles to the facts of the case before us as brought out in detail in the above paragraph, we hold that the assessment order under section 143(3) read with section 153C could not be revised under .....

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em vs. ITO, Ward-1, Kothagudem in ITA.No.995/H/2014 dated 10.10.2014. 5.2. We find that in the case of the assessee, the A.O. has rejected the books of the assessee and has estimated the income @ 16% of the gross receipts and the CIT under section 263 is seeking to examine the receipts and expenditure claimed by the assessee. In the case of Indwell Constructions (supra), the jurisdictional High Court was seized of similar matter and has held as under: HELD: The pattern of assessment under the Ac .....

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ng Officer may reject those books and estimate the income to the best of his judgment. When such an estimate is made it is in substitution of the income that is to be computed under section 29. In other words, all the deductions which are referred to under section 29 are deemed to have been taken into account while making such an estimate. This will also mean that the embargo placed in section 40 is also taken into account. In the instant case, undoubtedly, there was a big difference between pro .....

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e profit and loss account, he was relying on the rejected books which he could not do. There was also a further difficulty, if section 40 was to be taken into account even after making an estimate. When there are certain other deductions which are to be disallowed such as wealth-tax payment in section 40, it cannot be said that after making an estimate, the wealth-tax charged in the profit and loss account should again be added back to the profit. Therefore, no separate addition representing the .....

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