TMI Blog2016 (7) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... n the wrong assumption of facts is to be declared as bad in law. With regard to the argument advanced by the Learned DR that the loss arising on account of advances written off should be construed as capital loss for which certain case laws were relied upon by him, in view of our aforesaid findings and judicial precedents relied upon hereinabove, we don’t deem it fit and appropriate to get into the aspect of whether the loss arising on account of write off is a capital loss or not. Thus the revisionary jurisdiction invoked by the Learned CIT u/s 263 is to be quashed. - Decided in favour of assessee - I.T.A No.1713/Kol/2014 - - - Dated:- 8-7-2016 - Shri N. V. Vasudevan, JM Shri M. Balaganesh, AM For The Appellant: Shri S. Jhajharia, AR For The Respondent: Shri G. Mallikarjuna, CIT, DR ORDER Per Shri M. Balaganesh, AM: This appeal by assessee is arising out of revision order of CIT-1, Kolkata vide M. No. CIT,Kol-1/263/2013-14/10885-87 dated 31.03.2014. Assessment was framed by JCIT(OSD), CIT-1, Kolkata u/s. 143(3) of the Income tax Act, 1961 (hereinafter referred to as the Act ) for AY 2009-10 vide his order dated 23.12.2011. 2. At the outset, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. Based on these reasons , the Learned AR pleaded that the delay had occurred only due to reasons beyond the control of the assessee as narrated hereinabove. In response to this, the Learned DR strongly objected to the condonation on the ground that the assessee had not adduced sufficient cause by way of illness or genuinely obstructed by reasons beyond the control of the assessee for the delay in filing the appeal. Accordingly, he argued that the appeal of the assessee should be dismissed as unadmitted. In response to this, the Learned AR placed reliance on the decision of the Mumbai Tribunal in the case of Prashant Projects Ltd vs DCIT reported in (2013) 145 ITD 202 (Mum Trib) dated 4.9.2013 for the expression sufficient cause . 2.1. We find that the substantial justice should prevail over technical considerations. It is true that every day s delay must be explained by the assessee and it does not mean that a pedantic approach should be taken. The doctrine must be applied in a rational common sense and pragmatic manner. In the case of Vedabhai Alias Vaijayantabai Baburao Patil vs Shantaram Baburao Patil Others reported in 253 ITR 798 (SC) , the Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be ignored and it becomes very important and significant when the delay is inordinate and abnormal. vii). In the matter of J.B. Advani Co. (P.) Ltd.(72 ITR 395) Hon ble Supreme Court had held that explanation of delay for the entire period is necessary. In other words what is expected of the appellant in such matters is to show that delay was occasioned due to some sufficient cause. The cause pleaded should not only be a probable one but it should be real and sufficiently reasonable. It would not be any sort of assertion that would amount to sufficient cause and would justify the condonation of delay. The cause pleaded must fit in the facts and circumstances of the given case and the explanation offered regarding the delay occasioned by such cause should appeal to reasons so as to get judicial approval. In short in matters of delay it is neither practicable nor desirable to explain minute-to-minute/hour-tohour delay, but delay has to be explained. viii). When an application for condonation of delay is made; to consider whether a sufficient cause has been made out by the assessee; the order of the FAA should disclose that he had applied his mind to the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce after demerger of Titagarh of Titagarh Industries into 3 units namely Titagarh Steels Ltd. Titagarh Papers Ltd and Bhatpara Papers Ltd as per the orders of Calcutta High Court dt. 01.02.2006. The advances were given from time to time to safeguard their properties. Since the mills had no operation during the last 4-5 years the advances had become irrecoverable and hence written off. The break up of above advance is given below: Titagarh Papers ltd. ₹ 66,44,083/- Bhatpara Papers Ltd. Rs.1,30,93,672/- Rs.1,97,37,755/- 5. The Learned CIT issued a show cause notice assuming jurisdiction u/s 263 of the Act by stating that the assessee had not offered any income in terms of section 36(2) of the Act out of these advances and accordingly not entitled for deduction u/s 36(1)(vii) of the Act on the write off of the same. Accordingly, he observed that the Learned AO had not considered this issue in the proper manner and held that the order passed by the Learned AO is erroneous in so far as it is prejudicial to the interests of the revenue and passed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that without prejudice and even otherwise such loans and advances having been made in course of business and for the purposes of business and being unrealizable having been actually written off and the AO in accepting the write off of such loans and advances for ₹ 1,97,37,755/- having taken a possible legal view and hence in view of the facts and circumstances of the case, provisions of sec. 263 are not validly applicable in respect of write off of such loans and advances of ₹ 1,97,37,755/- and in view of the facts and in the circumstances provisions of sec. 263 did not validly lie in this case and in view of the facts and in the circumstances it may kindly be held accordingly and the order U/S 263 may kindly be quashed/cancelled and in any case, the same may kindly be held as allowable. 6. For that your petitioner craves the right to raise additional ground or grounds of appeal on or before the date of hearing and or to alter/amend/rectify the present any ground or grounds of appeal. 6. The Learned AR argued that this issue was already examined in the original assessment proceedings and the Learned AO had raised a specific query in this regard and after exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in 3 ITR(T) 1 and the decision of the Hon ble Karnataka High Court in the case of CIT vs Epsilon Advisers Pvt Ltd in ITA No. 23 of 2006 dated 13.6.2012 . 8. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee comprising of copy of audited financial statements for the year ended 31.3.2009 (pages 1 to 36 of PB) ; copy of notice dated 17.10.2011 issued by the Learned AO making a specific query with regard to advances written off during original scrutiny assessment proceedings (pages 38-39 of PB) ; copy of reply filed by assessee vide letter dated 19.10.2011 (pages 40 -41 of PB) ; copy of original assessment order u/s 143(3) dt 23.12.2011 (pages 42-43 of PB) ; copy of show cause notice issued u/s 263 dated 23.1.2014 (pg 44 of PB) and copy of reply to show cause notice by assessee (pages 45-46 of PB). We find that the Learned AO had issued a specific questionnaire during original scrutiny assessment proceedings vide notice dated 17.10.2011 as below:- - That an item termed as Extra Ordinary items of ₹ 1,97,37,755/- claimed as an debit item of the P/L A/c with no explanation made therein It is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the above, it could safely be concluded that the Learned AO had duly appreciated this stand of the assessee during the course of original assessment proceedings and had allowed the deduction to assessee by taking one of the possible views in the matter. When one possible view has been taken, the same cannot be substituted by another view of the Learned CIT. We also place reliance on the decision of the Hon ble Delhi High Court in the case of ITO vs D.G.Housing Projects Ltd reported in (2012) 343 ITR 329 (Del) 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 Income-tax Act, 1961.The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. In such matters, to remand the matter to the Assessing Officer would imply the Commissioner has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the question. The order of the Assessing Officer may or may not be wrong. The Commissioner cannot direct reconsideration only when the order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal. It was evident from the order of the High Court that the findings recorded by the Tribunal that the appellant stopped agricultural operation in November, 1982, and that the receipt under consideration did not relate to any agricultural operation carried on by the appellant, were not questioned before it. Though the High Court was not right in holding that the said amount was paid for breach of contract, as it was paid in modification/relaxation of the terms of the contract, the High Court was justified in concluding that the said amount was a taxable receipt under the head Income from other sources . 8.1.2. We also find that the Hon ble Allahabad High Court in the case of Principal CIT vs M/s Ashok Handloom Factory Pvt Ltd in ITA No. 19 of 2016 dated 28.1.2016 had held as under:- It is settled law that the CIT can exercise his jurisdiction under section 263 of the Income Tax Act only in cases where no enquiry is made by the Assessing Officer. In the instant case, it is admitted by the Income Tax Department that the Assessing Officer has made some enquiries though according to them it was not a proper enquiry. In our view of the fact that some enquiry was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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