TMI Blog2014 (8) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... even though the said information was duly asked for by the assessing officer, yet the assessing officer passed the assessment ignoring whether any income arises during the year. It is not a case where the AO has allowed the deduction by taking one of the possible views. It is also not a case of inadequate inquiry but a case where no inquiry has been conducted by the AO on the applicability of section 2(47) of the Income Tax Act for the gain arising on the transaction which the assessee had with M/s Emgee Housing P Ltd. Lack of enquiry will tantamount to be that the order is erroneous and prejudicial to the interest of Revenue. Our aforesaid view is duly supported by the decision of Full Bench of Guwahati High Court in the case of CIT vs Jawahar Bhattacharjee, (2012 (4) TMI 222 - GAUHATI HIGH COURT ) in which Hon‟ble High Court took the view “ Not holding such inquiry as a normal and not applying the mind to the relevant material in making an assessment would be an erroneous assessment warranting exercise of revisional jurisdiction.” The CIT has already restored this issue to the file of the Assessing Officer and the Assessing Officer, after giving proper opportunity to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of Property Act 1882 in A.Y 2012-13 and the same was rightly disclosed and offered by the assessee. 5. The learned C.I.T erred in not appreciating that there was a view formed by A.O after detailed analysis and scrutiny and merely because CIT is of a different view it will not result in to assessment being erroneous and prejudicial to the interest of revenue. 6. The reasons assigned for holding that order originally passed by A.O u/s 153A r.w.s. 143(3) is erroneous and prejudicial to the interest of revenue are wrong, insufficient and contrary to law and facts of the case. 7. The appellant craves to stay the re-assessment proceedings under the provisions of sec 263 for setting aside the original assessment order passed by the DCIT, Central Circle, Panaji, Goa vide sec 153A w.r.s 143(3) dated 29.12.2011 and recovery proceedings for the relevant assessment year till this appeal is heard and disposed by the Hon ITAT, Appellate Authorities. Similarly, in ITA Nos. 172 173/PNJ/2014 during A.Y 2010-11 both the Assessees have taken the following common grounds of appeal : 1. On the facts and circumstances and in law the learned C.I.T erred in passing or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l A/EB/21 dt.25.2.2010. The Assessee entered into Memorandum of Understanding dt. 31.3.2006 along with his wife and Mr. Armando Gonsalves with M/s. Emgee Housing Pvt. Ltd. for sale of the property at Survey No. 234/2 admeasuring 18,500 sq. mtrs. for a consideration of ₹ 6 crores. Further, the property at Survey No. 225/1 and 4 and 227/1 admeasuring 28,341 sq. mtrs. belonging to Sajjad Sheikh and Mrs.Zaibum Sheikh were also agreed to be sold to M/s. Emgee Housing Pvt. Ltd. at Oxdell at Dona Paula for a consideration of ₹ 6 crores. Both the properties were adjacent to each other. The total consideration for both the properties is ₹ 12 crores. On 25.3.2010 the statement of the Assessee was recorded wherein relevant question no. 57 reads as under : Q. No. 57: I am showing you page 25 to 30 of seized material A/EB/21 dated 25.02.2010 which is the MOU dated 31.03.2006 between Mr. Sadiq Sheikh, Mrs. Sadia Sheikh, Mr. Armando Gobsalves and M/s. EMGEE Housing Pvt. Ltd. for sale property at Sy. No. 234/2 measuring 18,500 sq. mtrs., at Oxdell at Dona Paula for a consideration of ₹ 6,00,00,000/-. Please explain in detail this transaction ? Ans: This transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view that the order passed by the assessing officer is erroneous as well as prejudicial to the interest of revenue and ultimately set aside the order for A.Y 2006-07 and directed the AO to consider this transaction in accordance with the provisions of Income Tax Act after giving sufficient opportunity to the Assessee by mentioning as under: Therefore, in the instant case, the income would be taxable in the year in which such transactions are entered into even if the transfer of the immovable property is not effective or complete under the General Law. Further, in the present case, there is an agreement in writing and it pertains to the immovable property. The transferee agreed and willing to perform his part of contract. Thus all the conditions for a valid contract are satisfied in the instant case. The contents of the MoU are to be read as a whole, rather than by each individual clause of the same. If the exercise is done, it is very clear that the transaction amounts to transfer within the meaning of Sec. 2(47) of the Act. Thus there was a transfer as per the contents of the MoUdt. 31.3.2006 regarding the said property transaction and income arising thereon is liable to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so asked detailed working of the income generated therefrom. By referring to the reply of the Assessee, it was contended that the Assessee simply submitted the MOU dt. 26.11.2009 but did not submit any note etc. on the transaction which the Assessee had with the said party. 7. When the Bench countered Ld AR with this fact, the Ld. AR agreed that except for the Memorandum of Understanding, no note on the transaction which the Assessee had with respect to this transaction has been filed by the assessee before the AO as per the record available with him. Even there is no such evidence on record but the ld. AR vehemently contended that even otherwise on merit, this transaction cannot be made taxable during the impugned assessment year as there was no transfer u/s 2(47) of the Income Tax Act during the impugned assessment year, therefore, there cannot be any error in the order passed by the assessing officer. 8. We have carefully considered the rival submission and perused the material on record along with the case laws as relied on and the order of the CIT passed u/s. 263 of the Act. We noted that in this case the CIT invoked jurisdiction u/s 263 in respect of order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in clause (v), as per which it includes any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. Therefore, the income arising from the above transactions has to be assessed in the year in which the assessee has entered into an agreement i.e. AY2006-07. Therefore, it was considered that the action of the Assessing Officer in not considering the amounts received by the assesse out of the said Agreement mentioned above while passing the assessment order under section 153A r.w.s.143(3) dtd.29.12.2011 of the Income Tax Act, 1961 was erroneous in so far as it is prejudicial to the interests of the revenue and accordingly the provisions of section 263 of the Income Tax Act were proposed to be invoked. Before deciding the issue whether the order passed u/s 263 is valid or not, it is essential to refer to the relevant provisions of Sec. 263. Section 263 lays down as under:- 263. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 8.1 From the perusal of the aforesaid section, it is apparent that there are four main features of the power of revision to be exercised u/s 263 by the Commissioner of Income-tax. Firstly, the Commissioner may call for and examine the records of any proceedings under the Act and for this purpose he need not to show any reason or record any reason to believe. It is a part of his administrative power to call for the record and examine them relating to any assessee. Secondly, he may consider any order passed by the Assessing Officer as erroneous as well as prejudicial to the interest of the Revenue. This is exercised by calling for and examining the record available at this stage. There is no question of the assessee to appear and make submission at this stage. Thirdly, if after calling for and examining the records the Commissioner considers that the order of the Assessing Officer is erroneous in so far it is prejudicial to the interest of the Revenue, he is bound to give an opportunity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apparently that the A.O. in this case during the impugned A.Y. has even though issued questionnaire to the assessee by way of following query being query no.37 which read as under:- 37. Please furnish a detailed note on the transactions with M/s. Emgee Housing Pvt. Ltd Development of land at Oxdell Dona Paula Whether the transaction has been completed if so, please furnish detailed working on the income generated. the assessee did not submit any reply on the query as desired by the A.O and no further query etc. was raised by the assessing officer whether the transaction entered into by the assessee can be regarded to be the transfer taken place during the year as per the provision of section 2(47) of the Income tax Act. Rather by not submitting the reply, the assesse debarred the AO to make an inquiry on the taxability of the transaction. It is a clear case of lack of inquiry and completing the assessment without getting the complete information as has been asked for. 8.4 Now the question arise whether lack of enquiry by the assessing officer will tantamount to be the one which is erroneous and prejudicial to the interest of the revenue. We noted that a simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such relevant facts in a manner as are required to be done by the assessing authority. The aspect of deduction of interest paid on income tax was neither enquired nor shown to have been verified by the Assessing Officer and thus the order of assessment is erroneous on that count as well. 13. Admittedly the Assessing Officer being a quasi-judicial authority had three functions (i) to collect the materials and information (ii) to process the materials and information; and (iii) to adjudicate on the consideration of such materials and information. In a case like this, where the Assessing Officer has failed to perform his duties in number (i) and (ii) above and proceeds to adjudicate, such orders are taken to have been passed in a slip-shod manner and cannot be taken to be orders passed in accordance with law. Definitely such actions of the Govt. functionaries goes to effect the reputation of Revenue Department adversely and cause prejudice to their interests, besides causing loss of revenue by his such decision. 14. The appellant s plea that similar issue was also a subject matter of assessment in assessment year 2008-09, not an year in appeal before us is of no conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt Ltd on the basis of page 25 to 30 of the seized material A/EB/21 dated 25.2.10.The AO, in this case, we noted, except asking for the note on the transaction with details, assessee entered into with M/s Emgee Housing P Ltd did not examine whether the provision of section 2(47) are applicable on these transaction or not during the year. Not only this, this an disputed fact that the assessee did not file any note or details on the transactions entered into by the assessee with M/s Emgee Housing P Ltd, even though the said information was duly asked for by the assessing officer, yet the assessing officer passed the assessment ignoring whether any income arises during the year. It is not a case where the AO has allowed the deduction by taking one of the possible views. It is also not a case of inadequate inquiry but a case where no inquiry has been conducted by the AO on the applicability of section 2(47) of the Income Tax Act for the gain arising on the transaction which the assessee had with M/s Emgee Housing P Ltd. 8.7 We have gone through the decision of CIT vs. Vodafone Essar South Ltd. 212 Taxmann 184 (Del.) on which the ld . AR vehemently relied. We noted that this decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills, books of accounts, invoices, payments etc. and even made inquiries on the issue under consideration and the Assessee had given a detailed explanation by letter furnishing the data. Under these facts, it was held that the order cannot be said to be prejudicial to the interest of the revenue because the AO did not make a detailed discussion. In the case of the Assessee, we noted that even though the AO has raised the query, the Assessee did not reply and even no such evidence or material was brought to our knowledge by the ld. AR though the Bench specifically asked the ld. AR whether any explanation was submitted in respect of the transaction before the AO. The AO, therefore, in the absence of the enquiry and filing of details passed the order. Therefore, this decision will also not help the Assessee. 8.10 We have also gone through the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Amit Corporation, 21 taxmann.com 64 . This case, we noted, will not help the Assessee. In this case also the books of accounts, bills, vouchers, cash book etc. were produced by the Assessee before the AO at the time of assessment proceedings and on that basis the AO had fra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case will also not help the Assessee because in the case before us, the Assessee did not file the reply to the query raised by the AO. 8.14 Coming to the decision in the case of Indu Fine Lands (P) Ltd. vs. CIT, 45 taxmann.com 307 (Hyd) we noted that in this case the Assessee company has advanced a sum of ₹ 20 crores to another company for buying a piece of land and entered into development agreement with its group company. The deal could not materialize and the group company paid the sum of ₹ 20 crores to the Assessee as compensation. The AO held that the amount paid to the company was a capital expenditure and the sum received by it was capital receipt in the hands of the Assessee. CIT invoked jurisdiction u/s 263 and directed the AO on these facts to make a further inquiry. On these facts, the Hyderabad Bench of this Tribunal took the view that the assumption of jurisdiction u/s 263 by CIT itself was not proper since the view taken by the AO was one of the possible views and there was no material before the Commissioner to vary with the opinion of the AO. This is a case where the AO has taken a view on the basis of the facts before him but in the case before us, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenditure incurred by the Assessee and Assessee had given detailed expenditure. The order passed by the AO was held not to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Thus, in our view the case law relied on by the ld. AR for lack of inquiry/inadequate inquiry will not assist the Assessee. 8.21 The decision of the coordinate Bench in the case of the V.N. Salgaoncar is binding on us and we cannot take a different view as suggested by learned AR. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [2000] 243 ITR 83, at page 88 has categorically held as under: In the instant case, the Commissioner noted that the Income Tax Officer passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the Income Tax Officer failed to apply his mind to the case in all perspective and the order passed by him was erroneous. It appears that the resolution passed by the board of the appellant company was not placed before the Assessing Officer. Thus, there was no material to support the claim of the appellant that the said amount represented compensation for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has been made without making the proper enquiry and application of mind, the order is erroneous and prejudicial to the interest of Revenue. Unlike the Civil Court which is neutral to give a decision on the basis of evidence produced before it, an Assessing Officer is not only an adjudicator but is also an investigator. The Assessing Officer cannot remain passive on the face of a return which is apparently in order but calls for further enquiry. It is the duty of the Assessing Officer to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke enquiry. If there is failure to make such enquiry, in our opinion, the order is erroneous and prejudicial to the interest of Revenue. The Revenue has not to prove that its order is erroneous and CIT can revise it u/s 263. Even the Hon'ble Allahabad High Court in the case of Swarup Vegetable Products Industries Ltd. (No. 1) vs. CIT [1991] 187 ITR 412 has also taken the similar view by observing as under: It is beyond dispute that, under section 263 of the I.T. Act, the Commissioner has power to set aside the assessment order and send the matter for fresh assessment if he is sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er becomes erroneous because such an enquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. In the instant case, the Assessing Officer failed to make any enquiry in regard to the allowability of the provision for gratuity. As such, the order was erroneous and prejudicial to the interests of the revenue. Therefore, the conditions precedent for assuming jurisdiction under section 263 did exist in the facts of the instant case. 8.24 We have also gone through the decision of I.T.A.T. E‟ Bench New Delhi in I.T.A. No.1438/Del/09 in the case of N.T.P.C. Limited vs. Dy. CIT. On the case of lack of enquiry in this judgment while dealing the issue of lack of enquiry, the Tribunal, under para 14 has held as under: 14. In the light of above propositions let us examine the facts of the present case. On page No. 5 of the paper book, Volume-I, the assessee has placed on record copy of the questionnaire dated 29/06/2006 issued by the Assessing Officer. In this questionnaire, Assessing Officer has called for information from the assessee under sec. 142(1) on fifteen counts. With the assistan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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