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Jyoti Ranjan Roy Versus C.I.T., Kol-XVII, Kolkata

Revision u/s 263 - taxability of advances received - fishing and roving enquires - Held that:- We find that the assessee had placed various orders on record to prove that the advances received were already taxed in earlier years in piecemeal basis. We find that out of the advances received, ₹ 21,50,825/- , ₹ 48,86,847/-, ₹ 11,11,817/- , ₹ 5,06,066/- , ₹ 5,66,952/- were taxed in Asst Years 1999-2000 to 2003-04 respectively and ₹ 50,75,641/- was taxed in Asst Ye .....

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itiate proceedings with a view to start fishing and roving enquires in matters or orders which are already concluded. - Entire revision proceedings had been triggered merely on the basis that the advances received were remaining outstanding in the balance sheet as on 31.3.2008. This might at best could be construed only as an error committed by the assessee in his books. But that does not make the order of the ld. AO erroneous. In these circumstances, it could only be inferred that the ld. A .....

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.T.A No. 1251/Kol/2013 - Dated:- 1-7-2016 - Shri M.Balaganesh, AM & Sri S.S.Viswanethra Ravi, JM For The Appellant : Shri T.K.Chakraborty, A.R. For The Respondent : Shri G.Mallikarjun, CIT, DR ORDER Per M.Balaganesh, AM This appeal of the assessee arises out of the order of the Learned CIT in Memo No. CIT-XVII/U/s.263/20-12-13/763-765 dated 08.03.2013 against the order of assessment framed for the Asst Year 2008-09 u/s 144 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. .....

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10 determining total income at ₹ 27,42,717/- against return income of ₹ 20,04,169/-. The assessee filed appeal before the C.I.T. (A)- XXXII Kol against the said order of the A.O. on 03/02/2011. 4. On 06/11/2012 the Administrative C.IT.- XVII Kolkata issued a notice U/s. 263 of the I.T. Act proposing to issue direction as the assessment order passed U/s.144 on 31/12/2010 was considered by her as erroneous and prejudicial to the interest of revenue. The C.I.T.-XVII Kol further stated i .....

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orward from earlier years and accordingly the same cannot be taxed as income of Asst Year 2008-09. It was submitted that the said advance was received by the assessee during Asst Year 1999- 2000 and the same was taxed by the ld. AO u/s 41(1) of the Act. On further appeal to tribunal, the same was disposed off vide order in ITA No. 2177/kol/2007 dated 25.1.2008 by deleting the addition made towards advance received u/s 41(1) of the Act, but with a direction to tax the net profit derived from the .....

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re is no violation of provisions of the Income Tax Act. 6. The ld. CIT ignoring the submissions of the assessee resorted to pass an order u/s 263 revising the assessment framed for the Asst Year 2008-09 u/s 143(3) dated 31.12.2010 by treating the order of ld. AO as erroneous and prejudicial to the interests of the revenue. According to ld. CIT , the issue was not properly examined by the ld. AO during assessment proceedings. He set aside the assessment with the direction to examine the above iss .....

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revenue. 2. That, the action of the Ld. CI.T. U/s 263 of the I.T. Act in setting aside the assessment for the Asst. year 2008 - 2009 is totally unjustified as the issue relating to carried forward advance amounting to ₹ 2,88,21,596/- was considered by the A.O. in Asst. years 1999 - 2000 and 2005 - 2006 . 3. That the Ld. CI.T. while assuming jurisdiction U/s 263 of the I.T. Act appears to have not examined the records available to the Department even after pointing out the above fact of con .....

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) ₹ 2,88,21,596 It was further stated that the final left over advance received for construction activity amounting to ₹ 50,75,641/- has been duly taxed by the ld. AO in Asst Year 2005-06 vide order passed u/s 143(3) dated 24.12.2007. He also placed the copies of various balance sheets commencing from Asst Years 1999-2000 to 2005-06 to show that the advances have been gradually decreasing over the years. He also placed on record the copies of various scrutiny assessment orders to pro .....

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while passing the exparte order u/s 144 of the Act and hence the same has to be construed of having taken one possible view by the ld. AO which cannot be the subject matter of revision u/s 263 of the Act. He also argued that the ld. CIT had never stated in his revision order as to how the order passed by the ld. AO is erroneous in so far as it is prejudicial to the interests of the revenue within the meaning of section 263 of the Act. It was also argued that if in the opinion of the ld. CIT , t .....

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nterests of the revenue. In support of his arguments, he placed reliance on the following decisions :- Malabar Industrial Co. Ltd vs CIT reported in (2000) 243 ITR 83 (SC) CIT vs Gabriel India Ltd reported in (1993) 203 ITR 108 (Bom) 9. In response to this, the ld. DR argued that the assessment was framed u/s 144 of the Act due to non-cooperation from the side of the assessee during assessment proceedings and hence the ld. AO could not have the occasion to go into the facts stated by the ld. AR .....

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The ld. CIT had not directed the ld. AO to make an addition towards advance received. He had simply stated that the issue of advance received be examined in the light of the facts stated by the assessee and in the light of earlier tribunal decisions in assessee s own case. Hence no prejudice or harm is caused to the assessee by this direction and accordingly argued that the ld. CIT had rightly invoked his revisionary jurisdiction u/s 263 of the Act. 10. In defence, the ld. AR argued that the fra .....

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quashing of the section 263 order. 11. We have heard the rival submissions and perused the materials available on record. The facts stated hereinabove are not reiterated for the sake of brevity. We find that in the instant case, the ld. CIT had not made any enquiry to arrive at a prima facie conclusion that the order passed by the ld. AO is erroneous. He simply passed on this responsibility to the ld. AO. This action, in our opinion, is not in accordance with the provisions of section 263 (1) o .....

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circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. 11.1. We find that the above provisions are very clear that the ld. CIT had to make enquiry if he deems necessary on examination of the records. Based on such enquiry alone, he could arrive at a prima facie conclusion by pinpointing the error in the order of the ld. AO. He need not finally conclude the issue based on his enquiry. We hold that .....

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missions, he should have conducted further enquiry on the matter to find out the error, if any, in the order passed by the ld. AO. We find that the mandate of section 263(1) of the Act has been missed out by the ld. CIT. 11.2. We find that the assessee had placed various orders on record to prove that the advances received were already taxed in earlier years in piecemeal basis. We find that out of the advances received, ₹ 21,50,825/- , ₹ 48,86,847/-, ₹ 11,11,817/- , ₹ 5,0 .....

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r Asst Year 2008- 09 cannot be treated as prejudicial to the interests of the revenue. We hold that the ld. CIT had only tried to initiate proceedings with a view to start fishing and roving enquires in matters or orders which are already concluded. 11.3. We find that the entire revision proceedings had been triggered merely on the basis that the advances received were remaining outstanding in the balance sheet as on 31.3.2008. This might at best could be construed only as an error committed by .....

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d. AR are well founded:- Malabar Industrial Co. LTd vs CIT reported in (2000) 243 ITR 83 (SC) A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be .....

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d. 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 interests of the Revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to l .....

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sessing' Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted 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. CIT .....

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aused to the. interests of the Revenue. An order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him. the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income tax Officer, who passed the order, unl .....

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timated the income at a higher figure than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. This is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may b .....

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subject matter of revision because the second requirement. must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute, on an incorrect or incomplete interpretation, a lesser tax than what was just has been imposed. When exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on .....

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