GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (12) TMI 1510 - GUJARAT HIGH COURT

2015 (12) TMI 1510 - GUJARAT HIGH COURT - TMI - Revision u/s 263 - Held that:- Merely because the assessing officer has made additions in a particular manner would not mean that the Commissioner would be confined to scrutiny of the methodology adopted by the assessing officer and to proceed either to confirm or to delete the additions, if such methodology is not found entirely satisfactory. Even without the aid of these wide powers, the appellate authority would have inherent power to uphold the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

faction of the Commissioner and, therefore, to make additions on better premises with better reasoning or on different application of legal principles.In the result, in our opinion, the Commissioner lacked jurisdiction to issue the impugned notice. When the question is the very foundation of the notice and jurisdiction of the Commissioner to exercise such powers, the question of relegating the petitioner to alternative remedy or to permit the Commissioner to complete the proceedings and thereaft .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, as at Annexure-I to the petition, issued by the Commissioner of Income Tax initiating revisional proceedings under section 263 of the income-tax Act, 1961 ("the Act" for short) for assessment years 2008-09 to 2012-13. Brief facts are as under: 2. Petitioner is a Company registered under the Companies Act and is regularly assessed to tax. For the assessment years 2006- 07 to 2012-13, petitioner had filed returns of income which were processed by the revenue authorities. Later on, howe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on by the assessing officer. The assessing officer noted that the company had claimed that it had got certain construction works executed by sub-contractors during the period under consideration. However, upon scrutiny, it was found that these vendors were not available at the given addresses. The assessee was, therefore, called upon to produce the vendors before the assessing officer along with books of accounts, bills, vouchers, inspection reports etc. The assessee was also called upon to show .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

such vendors for sub-contracts, were not verifiable. The assessee had claimed such expenditure in the profit & loss account. The assessing officer, therefore, was not satisfied with the correctness of the accounts of the assessee and rejected the books of accounts of the assessee in terms of section 145 (3) of the Act. He thereafter proceeded to compare the gross profit ratio of various other agencies in the similar business and made additions on this score spread over all the assessment yea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as under: "Date: 11.02.2015 To, J.M.C.Projects (India) Ltd. A-104, Shapath-IV, Opp.Karnavati Club, S.G.Highway, Ahmedabad. Sub: Notice for proceedings u/s.263 in your case for Assessment Years 2008-09 to 2012-13. Please refer to above. 2. In your case, Search u/s.132 of the Income-tax Act, 1961 was conducted on 17.11.2011. Thereafter, assessments were completed u/s.143(3) read with section 153A of the Act by the Deputy Commissioner, Central Circle-1(1), Ahmedabad on 29.03.2014. 3. From the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

48/- for the period for Assessment Years 2008-09 to 2012-13. Since the genuineness of these expenses could not be established by you, it was clear that you had inflated the expenses to the extent of ₹ 1,05,36,55,448/- and hence, the entire amount was liable to be disallowed and added back to your total income for various years. However, rather than making this specific addition, the AO rejected your books of accounts by invoking the provisions of section 145(3) of the Act and estimated the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

basis of material on record. Sd/- SANDEEP KAPOOR Pr.Commissioner of Income-tax (Central), Ahmedabad" 5. The petitioner has challenged this notice on various grounds. Counsel for the petitioner vehemently contended that the Commissioner had no authority to take the orders of assessment under revision in exercise of powers under section 263 of the Act. He pointed out that the assessing officer had made additions on account of non-verifiability of the payments made to 176 vendors which additio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

prejudicial to the interest of revenue. The Commissioner, therefore, had no jurisdiction to issue the notice under section 263 of the Act; (ii) Original assessments were made in consultation with higher authorities as required under the law. It was, therefore, not open for the Commissioner to revise such orders. (iii) Assessee's appeals were pending before the CIT (Appeals) and were being heard, where the main issue is the additions made by the assessing officer, which is also subject-matte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d that the wellsettled principle in considering the question whether an order is prejudicial to the interests of the Revenue or not is to address oneself whether the legitimate to revenue due to the exchequer has been realised or not or can be realised or not if the order, under consideration are allowed to stand. For arriving at this conclusion, it becomes necessary and relevant to consider whether the income in respect of which tax is to be realised, has been subjected to tax or not or if it i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rroneous. If the material in that regard is available on the record of the assessee concerned; the Commissioner cannot exercise his powers by ignoring that material which links the income concerned with the tax realisation made thereon. The two questions are interlinked and the authority exercising the powers under section 263 of the Act is under an obligation to consider the entire material about the existence of income and the tax which is realisable in accordance with law and further what tax .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dance with law, in consequence whereof the lawful revenue due to the State has not been realized or cannot be realised. It can mean nothing else". The aforesaid observations were also applied by the Gujarat High Court in Addl. CIT v. Mukur Corpn. (1978) 111 ITR 312. We are of the opinion that the aforesaid interpretation given by the Calcutta High Court to the expression 'prejudicial to the interests of the revenue' is the correct interpretation." (iii) In case of Malabar Indus .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in loss of revenue, or where two views are possible and the Income-tax 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 Income-tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such wi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or not. The Commissioner has in the notice itself pointed out that the additions made by the assessing officer were based on the rejection of books of accounts and on recalculation of the G.P. Rate. In fact, the assessing officer should have disallowed the entire expenditure of ₹ 105.36 crore which he failed to do. He, therefore, submitted that such addition should have been correctly made by the assessing officer so that the same can be sustained. Merely because the assessing officer has .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uld not interfere at this stage. In this context, reliance was placed on the decision of the Supreme Court in case of Commissioner of Income-tax v. Chhabi Dass Agarwal reported in (2013) 357 ITR 357. 8. Facts are not seriously in dispute. Assessments made by the assessing officer for the entire block period contained an import element of expenditure of ₹ 105.36 crore for the payments made to 176 different vendors by the petitioner as having sub-contracted certain works. Assessing Officer d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as against the expenditure of ₹ 105.36 crore claimed by the assessee to have been paid to these vendors, the assessing officer made addition of ₹ 123 crore by way of the income of the assessee. Whatever be the method adopted by the assessing officer, it remains a matter of fact that total income of ₹ 123 crore got added in case of the assessee in assessments for the assessment years 2008-09 to 2012-13. 9. The Commissioner does not dispute this aspect of the matter. Though in t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee. The crucial question, therefore, arises whether revisional powers under section 263 of the Act can be exercised. As held by the Supreme Court in the case of Malabar Industrial Co. Ltd. (supra), powers under section 263 of the Act would be available when an order of assessment is shown to be erroneous and prejudicial to the interests of the revenue. In other words, both the conditions, namely, that the order of assessment is erroneous and that is also prejudicial to the interests of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h of Delhi High Court held that, a finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under section 263 of the Act. The matter cannot be remanded for a fresh decision to the the assessing officer to conduct further inquiries without a finding that the order is erroneous. 12. As noted, Division Bench of this Court in case of Smt.Minalben S. Parikh (supra) held and observed that, if income in question has been taxed and legitimate .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

parameters and though taxed the same income, by applying wrong methodology. We may recall, in the impugned order the Commissioner expressed prima facie opinion that the entire expenditure of ₹ 105.36 crore was liable to be disallowed and added to the total income of the assessee. The assesssing officer, instead of making specific addition, rejected the books of accounts by invoking section 145 (3) of the Act and estimated the G.P. for different years. 14. As noted, when tax additions were .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ioner in the impugned notice, is adopted, the additions would stand the test of law. In other words, the Commissioner desires that the order of assessment should be better written and flaws, if any, be ironed out. In our opinion, powers under section 263 of the Act are not meant for improving an order of assessment. As long as the income is assessed and tax as per the law levied, the order cannot be stated to be prejudicial to the interests of the revenue and, therefore, not revisable. 15. There .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Commissioner. Sub-section (1) thereof provides, inter alia, that the Commissioner, while disposing of an appeal against the order of assessment, shall have the power to confirm, reduce and enhance or annul the assessment. Thus, once an appeal is filed by the assessee against an order of assessment, the appellate Commissioner while disposing of such appeal would have wide powers not only to annul the assessment or to reduce the assessment made by the assessing officer, but also to confirm or eve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version