Tax Management India. Com
                            Law and Practice: A Digital eBook ...
TMI - Tax Management India. Com
Case Laws Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Manuals SMS News Articles Highlights
        Home        
 
Extracts
Home List
← Previous Next →

Shri Virbhadra Singh (HUF) through its Karta Shri Virbhadra Singh Versus Principal Commissioner of Income Tax

2017 (10) TMI 381 - HIMACHAL PRADESH HIGH COURT

Revision u/s 263 - Tribunal upholding the validity of the revisionary order passed under section 263 - Held that:- We are of the considered view that no inquiry, as envisaged in law, was carried out, hence, question of the Commissioner taking an alternate possible view does not arise. The Assessing Officer cannot be said to have taken a plausible view, as envisaged in law, and the view taken by the Commissioner to be an alternative one. Finding of the Commissioner that the order is erroneous is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

turn was initiated. All transactions of sale of agricultural produce were in cash. Income declared was (a) disproportionately high only with respect to the relevant year and never in the preceding or succeeding years, (b) investment of huge amount of ₹ 3.8 crore was carried out by the Assessee himself, be from whatever source and there was no reference thereof in the original return. As such, omission or wrong statement cannot be said to be bonafide. Prima facie returns, being invalid, oug .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y the Commissioner is wide enough and not limited and restricted to the record as defined under clause (b) of sub-section (1) of Section 263 of the Act. In any case, even this definition is inclusive. It includes all records relating to any proceedings under the Act, be that of the Assessee or a third party, available at the time of examination by the Commissioner. The record need not pertain to the proceedings of the Assessee alone, be it for the relevant year or assessments pertaining to other .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

le by the Tribunal “to pass such orders” “as it deems fit”. - Decided against assessee. - ITA No. 4 of 2017 - Dated:- 5-10-2017 - Sanjay Karol, ACJ And Sandeep Sharma, JJ. For the Appellant : Mr.P.Chidambaram, Sr.Advocate, with M/s Rohit Jain, Vishal Mohan, Pranay Pratap Singh, S. Khurana, Aditya Sood and Sushant Kaprate, Advocates. For the Respondent : Mr. Vinay Kuthiala, Senior Advocate with Ms Vandana Kuthiala & Mr. Diwan Singh, Advocates. ORDER Sanjay Karol, Acting Chief Justice By way o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er dated 28.3.2013 (Annexure A-4) (Page-276), passed by the Assessing Officer, in accepting the Revised Return filed by the Assessee. 2. Parties agreed for admission of the appeal on the following Substantial Questions of Law, which we are called upon to decide: i) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in upholding the validity of the revisionary order dated 18.03.2014 passed under section 263 of the Act? ii) Whether on the facts and in the circumst .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

- Assessment Year 2010-2011 (hereinafter referred to as the relevant year) to be ₹ 7,22,943/- (Page-262). In the said Return, income from the source of agriculture, germane to present proceedings, he disclosed a sum of ₹ 15,00,000/-. Perusal of the Return (Page-265) reveals the Assessee to have also generated income from the source of LIC. 5. Such return was selected for scrutiny assessment through CASS. Hence, on 24.8.2011, statutory notice under Section 143(2) of the Act was issued .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2.2013, the Commissioner, by invoking revisional jurisdiction, under Section 263 of the Act, issued notice to the Assessee (Annexure A-5) (Page-282), and after affording opportunity of hearing, vide impugned order dated 18.3.2014 (Annexure A-2) (Page 203), set aside the assessment order, holding it to be erroneous as well as prejudicial to the interest of Revenue and remanded the matter back for fresh assessment in accordance with law. 9. Sometime in the month of May/June, 2014, Assessee laid ch .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cluding that: 14. Finally by the all possible exercises and enquiries, I conclude that most reasonably the orchard would have produced apple crops after setting off the expenses incurred for earning the said agriculture income, the net agriculture income of ₹ 15,00,000/- as per the original return of income filed by the assessee on 29.07.2010. I also conclude that the alleged MoU dated 15.06.2008 is a false and fabricated document which was prepared later by the assessee as an afterthought .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by ₹ 2,65,92,550/- therefore, penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 are being initiated separately. 17. With above remarks the taxable income of the assessee is computed as under: (All figures in INR) Taxable income as declared by the assessee. Rs.44,67,584/- Add Income from undisclosed sourced as discussed para 15 Rs.2,65,92,550/- Taxable Income Rs.3,10,60,134/- Agriculture income is assessed at ₹ 15,00,000/- as per original return filed on 29.07.2010. (Emph .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

see, Mr.P.Chidambaram, learned Senior Counsel, argued: (a) View taken by the Assessing Officer was a possible and plausible one. Simply because the Commissioner disagreed with the same, it was not open for him to have exercised his revisional jurisdiction, more so, without satisfying and recording the order being erroneous and prejudicial to the interest of Revenue. (b) In the alternative, having satisfied about the order being erroneous, rather than remitting the matter, the Commissioner himsel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(c) no opportunity to rebut the same was afforded to the Assessee, and (d) no opportunity was afforded to the Assessee to crossexamine the person whose statements were accepted by the Tribunal. 15. At this juncture, this Court feels obliged to reproduce the note handed over by Mr. Chidambaram, learned Senior Counsel, termed as Legal Propositions , restricting the grounds of challenge and the issues arising for consideration in the present appeal: Proposition I: Section 263 of the Income Tax Act .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ut there is some enquiry by the assessing officer, then the CIT cannot remit the matter to the assessing officer but he should decide it himself. Remit is permissible only in a case of no enquiry. Proposition III: The Appellate Tribunal (ITAT) was obliged to examine the correctness of the exercise of jurisdiction by the CIT under section 263 of the Act; in such a case rule permitting filing of additional evidence does not apply. In the present case, ITAT erred in permitting the additional eviden .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

support, reliance is sought on the following decisions rendered by different Courts of the land: (1) Malabar Industrial Co. Ltd. v. Commissioner of Income Tax, Kerala State, (2000) 2 SCC 718; (2) Commissioner of Income Tax v. Kwality Steel Suppliers Complex, (2017) 395 ITR 1 : AIR 2017 SC 2949; (3) Commissioner of Income Tax v. Gabriel India Ltd., (1993) 203 ITR 108; (4)Commissioner of Income-Tax v. Sunbeam Auto Ltd., (2011) 332 ITR 167; (5) Income-Tax Officer v. DG Housing Projects Ltd., (2012 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Section 263 of the Act. 18. On the other hand, Mr. Vinay Kuthiala, learned Senior Counsel appearing for the Revenue, with vehemence defends the action inter alia contending that (a) the impugned orders passed are strictly in accordance with law, (b) present appeal merits rejection in limine, for the Assessee, who is forum shopping, is guilty of suppressio veri, expressio falsi (c) similar issues based on similar facts already stand adjudicated by this Court in Shri Virbhadra Singh v. Deputy Com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Rajasthan v. T.N. Sahani and others, (2001) 10 SCC 619; (5) Thakur V. Hari Prasad v. Commissioner of Income-Tax, (1987) 167 ITR 603; (6) T.M.S. Mohamed Abdul Kader v. Commissioner of Gift-Tax, Madras, (1968) 70 ITR 237(Madras); (7) Commissioner of Income Tax v. Emery Stone Mfg. Co., (1995) 213 ITR 843 (Rajasthan); (8) Sunanda Ram Deka v. Commissioner of Income-Tax, (1994) 210 ITR 988; (9) Amjad Ali Nazir Ali v. Commissioner of Income-Tax, Kanpur, (1977) 110 ITR 419(Allahabad); (10) Addl. Com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t but suppressed, misled and mis-stated true facts. Also, an endeavour is made to resort to multiple proceedings and remedies, with a view to confuse the issue and abuse the process of law. Our attention is invited to the fact that in the present appeal, Assessee failed to disclose that against the order of remand dated 18.3.2014, though an appeal was filed but no application seeking stay of the order passed by the Commissioner was filed. For more than one and a half years, hearing of the appeal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

essio veri, expressio falsi. Reference is made to Sasi Enterprises (supra). 22. Well, we are not inclined to dismiss the appeal on this count, for we have endeavoured to answer the issues on merit. 23. It is next contended that the grounds raised in the present appeal can be considered and adjudicated in the appeal already preferred by the Assessee, assailing fresh order of assessment (re-assessment) passed by the Assessing Officer. Also we are not inclined to dismiss the appeal on this count. 2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ature of res judicata. 26. As such, uninfluenced of the preliminary objections, we proceed to examine the appeal on merits. 27. For adjudicating relevant statutory provisions, Sections 139, 142, 143, 147, 263, 254 of the Act and Rule 29 of the Income Tax Rules, 1962 (hereinafter referred to as the Rules) need to be examined. 28. Section 139 of the Act casts an obligation on every person, specified therein, to furnish return of his income, in a prescribed manner. Law provides (subsection (5) of S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct to all just exceptions, assess or reassess such income. 32. Under Section 263 of the Act, the Commissioner is empowered to call for and examine the record of any proceedings under the Act and on consideration, if the order passed by the Assessing Officer is found to be erroneous, insofar as it is prejudicial to the interest of Revenue, may, after giving the Assessee an opportunity of hearing and making or causing to make such inquiry, as may be deemed necessary, pass any order, enhancing or m .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

estion of law, to the High Court under the provisions of Section 260A of the Act. Certain Facts 35. It is a matter of record that in relation to three Assessment Years, i.e. 2008, 2009 and 2011, the Assessee and his family members made investments in the policies of Life Insurance Corporation (LIC) worth ₹ 6.18 crores. It is also an undisputed fact that in the relevant year (2009-10), Assessee and his family members made investments in purchase of LIC Policies for an amount, in excess of 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

2010 50,00,000 7. Virbhadra Singh 153597194 27.03.2010 1,00,00,000 8. Rani Pratibha Singh 153596149 26.02.2010 50,00,000 9. Vikramditya Singh 153596174 26.02.2010 50,00,000 3,80,00,000 36. On 19.7.2010, Assessee did not disclose such fact and declared his income from agricultural source to be ₹ 15,00,000/-. In the Revised Return filed on 2.3.2012, such income was declared to be ₹ 2,80,82,500/-. 37. Perusal of the order of the Assessing Officer, reveals the Assessee to have taken 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

the year 2011-12, when accounts were settled, professional advise was sought and (g) since there was no regular assessment and there being a mistake/defect/omission in the original return, a revised return was filed within the stipulated period of time. 38. The Assessing Officer has observed that: (a) notices were issued to the Agent who appeared and placed on record documents i.e. (i) his Income Tax Return for the relevant year, (ii) copies of account of gross apple receipts for the relevant ye .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee to have established that the agriculture income disclosed in the revised return of income pertains to the sale proceeds of horticulture and the same to have been invested by the Agent in LIC policies in the names of members of the HUF, as per the terms and conditions of the M.O.U , the Assessing Officer accepted the revised return. 40. One additional important fact. Between the date of filing of Revised Return (2.3.2012) and passing of the assessment order (28.3.2013), certain directions 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

e order passed by the Assessing Officer to be erroneous as well as prejudicial to the interests of Revenue, inter alia, on the ground that- (a) earning of additional income of ₹ 2.65 crore, so reflected in the Revised Return, was already within the knowledge of the Assessee, (b) it is not a case of bonafide omission, (c) the Assessing Officer failed to inquire from the Assessee, the source of ₹ 1.19 crore, an amount in excess of the income of ₹ 2.65 crore (approximately) from 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

produce of more than ₹ 2.8 crore is in cash. This fact is not disputed. 44. Further, it be kept in mind that the Assessee and his family members appeared to be fully aware of the income from agricultural source, for after all policies were purchased not in the name of the Agent, in an escrow account, for and on behalf of the Assessee, but in the name of the Assessee and his family members. After all, for purchase of such policies of huge amounts, requisite formalities are required to be c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s juncture, one fact, which is not disputed, to which our attention is invited by the Revenue, is that in relation to the years preceding and succeeding to the relevant year, income from agricultural source, is marginal, bordering what was originally declared by the Assessee. Income, grossly disproportionate is only with respect to the relevant year. 47. As we have already observed, in the instant case, Assessee did file his return, under Section 139 of the Act. However, only when notice under S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o be erroneous , for it being prejudicial to the interests of Revenue . He did not find the Assessee to have revised his return on the basis of discovery or omission or any wrong statement therein . 50. Hence, we are concerned with the meaning of expressions erroneous ; prejudicial to the interests of Revenue ; discovery ; or omission . 51. At this juncture, we may also observe that we are also concerned with the power of the Tribunal. Is it circumscribed to be the one exercised by the Commissio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the Allahabad High Court, in Amjad Ali Nazir Ali (supra), has held as under: It will be seen that so far as revised returns are concerned, the provisions under the old Act and the new Act are in pari materia. Now, after the decision of the Supreme Court in Commissioner of Income-tax v. S. Raman Chettiar [1965] 55 ITR 630 (SC), there cannot be any doubt that the revised return is also a return under Section 22 of the Indian Income-tax Act. Since the language of Section 139(5) of the new Act is .....

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 discovers any omission or any wrong statement therein. The use of the word "discovers", in our view, connotes discovery of some omission or wrong statement in the return, of which the assessee was not aware at the time of filing of the original return. It cannot cover a case where the omission or wrong statement contained in the first return is deliberate, for, in that case, it cannot be said that the revised return was filed by the assessee on discovery of any omission or wrong sta .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

utside the pale of section 139(5) of the Act, and it would not be a revised return as contemplated by the Act. Once this position is reached the question of considering the revised return for the purposes of penalty would hardly arise, for, in the eye of law, there would be no revised return as contemplated by Section 139(5). Such a revised return cannot supplant the original return and, for the purposes of penalty, it will be only the original return that will have to be looked into. [Emphasis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

closure of correct income, due to gross or willful negligence on the part of the Assessee would not entitle him to file revised returns, requiring assessment in accordance with law. 56. In Commissioner of Income Tax v. Dr. Sajjan Singh Malik, (1989) 178 ITR 643, the Punjab & Haryana High Court, in a case where the total income returned by the Assessee was less than 80%, the Court presumed that the Assessee had failed to rebut the presumption that he had failed to disclose the income in accor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mitted by the learned advocate, prejudicial to the interests of the revenue only if it is found that the assessment for the year was disclosed (sic) on the basis that an income had been earned which is assessable. Even where an income has not been earned and is not assessable, merely because the assessee wants it to be assessed in his or her hands in order to enable someone else who would have been assessed to a larger amount an assessment so made can certainly be erroneous and prejudicial to 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

revisional jurisdiction, Commissioner must exercise proper application of mind. In the given facts, Court found the view taken by the Assessing Officer to be a plausible one, inasmuch as family business, with the death of one of the partners continued to be carried on by the son of the deceased with his mother being another partner, accepting the book value of the stock-in-trade to be plausible and permissible view. 59. A Division Bench of the Rajasthan High Court, in Emery Stone Mfg. Co. (supra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ip; … … According to the definition, erroneous means involving error deviating from the law . Erroneous assessment refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, erroneous judgment means one rendered according to course and practice of court, but contrary to law, upon mistaken .....

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 for that of the Income-tax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer conc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interest of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, viz., that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interests of the Revenue, then also the power of suo motu r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rt reiterated the principle of order of the Commissioner fulfilling the twin test of revising the order passed by the Assessing Officer. It must be erroneous and prejudicial to the interests of Revenue. The Commissioner can call for and examine the record and by giving an opportunity of hearing make such inquiry as is deemed necessary. The Court, by taking into account the decision referred to by the Bombay High Court in Gabriel India Ltd. (supra), observed, erroneous to mean an order which is n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(Delhi) in Commissioner of Income Tax vs. Ashok Logani, (2012) 347 ITR 22 (Delhi) (Two-Judge Bench) reiterated the view taken by the High Court of Gujarat in CIT vs. Smt. Minalben S. Parikh, (1995) 215 ITR 81 (Guj), as under:- The words prejudicial to the interests of the Revenue has not been defined. However, giving the ordinary meaning to the words used in the statute, they must mean that the orders under consideration are such as are not in accordance with law and, in consequence whereof, 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

ncome in respect of which tax is to be realized has been subjected to tax or not or if it is subjected to tax, whether it has been subjected to tax at the rate at which it could yield the maximum revenue in accordance with law or not. If the income in question has been taxed and legitimate revenue due in respect of that income had been realized, though as a result of an erroneous order having been made in that respect, the Commissioner cannot exercise the powers for revising the order under sect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lizable in accordance with law and further what tax has in fact been realized under the assessment order. [Emphasis supplied] 63. The ratio and the decision stands reiterated subsequently in Commissioner of Income-Tax v. New Delhi Television Ltd., (2014) 360 ITR 44 (Delhi). 64. In Malabar Industrial Co. Ltd. (supra), the Apex Court (two-Judge Bench), clarified that pre-requisite for the Commissioner to suo motu exercise its jurisdiction is that the order of Income Tax Officer is erroneous, insof .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ned to loss of tax. Every loss of revenue cannot be treated as prejudicial to the interests of revenue. It clarified that when an Assessing Officer adopts one of the courses permissible in law, which has resulted in loss of revenue or where two views are possible, then difference of opinion cannot be treated as erroneous or prejudicial to the interests of Revenue, unless view taken by the Assessing Officer is unsustainable in law. The Court reiterated that where a sum not earned by a person is a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iry , clarifying that only in a case of lack of inquiry , would the Commissioner be entitled to exercise its revisional jurisdiction. 66. In DG Housing Projects Ltd. (supra), the Delhi High Court has only held that: 18. … … …An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not becom .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that so long as the view taken by the Assessing Officer is a possible view the same ought not to be interfered with by the Commissioner under Section 263 of the Act merely on the ground that there is another possible view of the matter. Permitting exercise of revisional power in a situation where two views are possible would really amount to conferring some kind of an appellate power in the revisional authority. This is a course of action that must be desisted from. However, the above is not 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

the aforesaid principles, we further proceed to discuss facts. 69. Perusal of order dated 28.3.2013, passed by the Assessing Officer, reveals that the original return filed by the Assessee was selected for scrutiny assessment through CASS and notice under Section 143(2) of the Act issued and served upon the Assessee on 29.8.2011. On 2.3.2012, in exercise of his right under Section 139(5), Assessee filed a revised return. While assessing the same, notices under Section 142(1) and 143(2) were issu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er, assessing the return of the Agent was called, which revealed that a sum of ₹ 2,65,92,500/- was payable to the assessee as agricultural income. Based on the said material, Assessing Officer carried out assessment, accepting the income declared in the revised return from agricultural sources to be ₹ 2,80,92,500/-, in place of ₹ 15,00,000/- as declared in the original return. 70. In this backdrop, can it be said that the Assessing Officer conducted any inquiry, as envisaged in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r gross mismatch in the income, was on account of any bonafide omission or a mistake. The order is conspicuously silent on this aspect. He does not consider that the receipts of sale proceeds of such income, in its entirety, amounting to ₹ 2,80,92,500/- in the relevant year, were in cash. It is not that the Assessee was not in the know of the investments made in the LIC. Huge investments of a sum of ₹ 3.80 crore (approximately) were made in the names of the Assessee and his family me .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rd. Validity of the return, fulfilling the condition prescribed under Section 139(5) was not examined, more so in the factual backdrop when the revised return came to be filed only after issuance of notice for scrutiny. Also, what took the Assessee more than six months to revise the return was not considered. 73. No doubt, views of the Officer assessing the Agent s income were solicited, but then such assessment could not be a binding precedent, for the Assessing Officer is obliged to independen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hree years was legally tenable or not, was not examined. Whether it was due to bonafide inadvertence or mistake, which fact never came to be disclosed in the original return was also not examined. 75. In fact, contradiction about the source of income, emanating from the order of the Assessing Officer, is writ large. On one hand, investment is accepted to have been made from the agricultural income and the money borrowed in the relevant year, whereas, on the other hand, it is sought to be justifi .....

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 LIC, (e) Assessee had been adopting the mercantile system of accounting and as such there was no settlement of accounts. All this, despite the Assessee having categorically disclosed therein, that a sum of ₹ 15 lakhs (approx.) was received as compensation for acquisition of land and that there was an income of ₹ 15 lakhs from agricultural source. Significantly, it is not the Assessee s case that such income was from another agricultural source/land. Perusal of the Return (Page-26 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he assessee from Sh. Anand Chauhan and exact mode of receipt date wise. 2. Find out the detailed accounts or originally shown agriculture income i.e. ₹ 15 lacs with dates of receiving sale proceeds. 3. Find the details of ₹ 43,84,396/- income from other sources. 4. Keep in mind the agriculture income shown in immediate proceeding and succeeding year from the years in which the income has been received i.e. A.Y. 2008-09, 2012-13, while examining the genuineness of the revised agricult .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Presumably, the Assessing Officer remained passive in his own inquiries and has relied only on the conclusions drawn by ITO, Ward-1, Shimla, in the case of Sh. Anand Chauhan . 80. Well, the observations of the Additional Commissioner of Income Tax have not weighed with us at all. 81. However, perusal of the order reflects the Commissioner to have carefully gone through the record , in correctly concluding that (a) in the given facts and circumstances, discovery of mistake or omission by the Ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

untenable, (e) there was non-compliance of directions issued under Section 144A, (f) assessment was carried out without conducting essential inquiry (Page- 230), as directed under Section 144A, (g) assessment was completed in casual and routine manner, (h) hence, it is a case of no inquiry (Page-232) and the order passed by the Assessing Officer to be erroneous as well as prejudicial to the interests of the Revenue (Page- 237). Mercantile System of Accounting 82. It cannot be said that the Comm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to the cash system of book keeping under which a record is kept of actual cash receipts and actual cash payments, entries being made only when money is actually collected or disbursed. That system brings into credit what is due, immediately it becomes legally due and before it is actually received and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed. The profits or gains of the business which are thus credited are not reali .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ued or arisen. (Followed in Commissioner of Income Tax, Chennail v. Bilahari Investment (P) Ltd., (2008) 4 SCC 232) 84. If the method of accounting consistently followed by the Assessee is not emanating from the record, Assessing Officer was duty bound to adopt such appropriate method as may be found fit for determining the issue. [Commissioner of Income-tax, Calcutta v. M/s British Paints India Ltd., AIR 1991 SC 1338 : 1992 Supp (1) SCC 55; Sanjeev Woollen Mills v. Commissioner of Income Tax, M .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

observed as under: From the above findings, it is hereby concluded that the A.O. has not made the required and essential enquiries as warranted by the facts of the case regarding the agriculture income and source of investment in LIC policy. He has not applied his mind to check whether there can be any possibility or availability of such a huge agriculture income. The A.O. has failed to make proper enquiries in this case and has not applied his mind in the right perspective. This is the case whe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the interest of revenue. Even during the proceedings u/s 263, the assessee has not given any material evidence to prove his contention that the investment in LIC policies are from the agriculture income earned from Shrikhand Orchard. 87. It is true that the Commissioner has loosely used certain expressions, with regard to the manner in which inquiry was conducted by the Assessing Officer, but then perusal of entire order reveals that he was certain about one fact. And that being, the inquiry co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

record and based on correct and complete appreciation of factual matrix with proper application of provisions of law. 88. We may only observe that the findings of the Commissioner are based on the record as defined in clause (b) of sub-section (1) of Section 263 of the Act. 89. Relying upon Sunbeam Auto Ltd. (supra) Mr.Chidambaram, argued that it is not open for the Commissioner to remit/remand the matter back to the authority. We find said decision to have been rendered in the given facts and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nhancing the amount of penalty. 90. Ambit and scope of power exercised by the authorities under Sections 263 and 254 are totally different and distinct. We have already discussed the scope of the former and now proceed to discuss about the latter. 91. The Income Tax Appellate Tribunal is not a Court but is a Tribunal exercising judicial powers. The Tribunal s powers in dealing with the appeals are of the widest amplitude and have in certain cases held similar to and identical with the powers of .....

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 Chapter XXXV of the Code of Criminal Procedure, 1898 (5 of 1898) corresponding to Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974). 92. The Apex Court in Hukumchand Mills Ltd. v. Commissioner of Income-Tax, Central, Bombay, (1967) 63 ITR 232 : AIR 1967 SC 455 (Three-Judge Bench), has held that the power of the Tribunal cannot be circumscribed or controlled by the Rules (Income Tax) which are merely procedural in character. It stands followed in Assam Travels Shi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e tax, Bombay City v. Hazarimal Nagji and Co., (1962) 46 ITR 1168 (Bom) and New India Assurance Co. Ltd. v. Commissioner of Income-tax, Excess Profits Tax, (1957) 31 ITR 844. In Polini v. Gray, (1879) 12 Ch.D 438. Appeal to grant stay at page 443: "It appears to me on principle that the Court ought to possess that jurisdiction, because the principle which underlies all orders for the preservation of property pending litigation is this, that the successful party is to reap the fruits of that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e jurisdiction of the Tribunal to allow a plea inconsistent with the plea raised before the Departmental authorities is canvassed. Under sub-section (4) of Section 33 of the Indian Income-tax Act, 1922, the Appellate Tribunal is competent to pass such orders on the appeal "as it thinks fit." There is nothing in the Income-tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. All questions whether of law or of fact which relat .....

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 another, (2006) 1 SCC 396) 95. In National Thermal Power Co. Ltd. v. Commissioner of Income Tax, (1997) 7 SCC 489, the Apex Court (three-Judge Bench) has held that: 4. …………Under Section 254 of the Income Tax Act the Appellate tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the tribunal in dealing with the appeals is thus expressed in the widest possible terms. The purpos .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ord in respect of that item. We do not see any reason to restrict the power of the tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of income Tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the tribunal. We fail to see why the tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 5. In the case of Jute Corpn. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the income Tax Officer. This court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rs of the Appellate Tribunal [vide e.g. CIT v. Anand Prasad, (1981) 128 ITR 388 (Del): CIT v. Karamchand Premchand (P) Ltd., (1969) 74 ITR 254 (Guj) and CIT v. Cellulose Products of India Ltd., (1985) 151 ITR 499 (Guj)]. Undoubtedly, the Tribunal will have the discretion a to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings we fail to see why such a question s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of law can be raised before the Tribunal. The decision does not in any way relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return……. 97. Applying these principles we proceed on merits. 98. Perusal of the order passed by the Tribunal reveals that for more than 1½ year, matter was adjourned for one reason or the other. In November, 2016, Revenue filed written submissions, enclosing therewith certain documents, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dditional evidence and considered the same for deciding the appeal. 99. It is in this backdrop, we proceed to discuss as to whether action of the Tribunal in accepting the documents, as additional evidence, is legally tenable or not. 100. We are in respectful agreement with the finding recorded by the Tribunal that the word record so defined in Section 263 of the Act, confines only to the proceedings conducted thereunder. 101. The Tribunal found the additional material sought to be relied upon b .....

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 collected during the course of proceedings pertaining only to the Agent and his submissions/statements during the course of adjudication thereof. 103. The question, which arises for consideration, is as to whether prior to the decision, the authority ought to have passed a separate order, accepting the additional evidence on record. 104. In Text Hundered India Pvt. Ltd. (supra), the Delhi High Court held the power of the Tribunal wide enough to admit additional evidence at its discretion for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e done even when application is filed by one of the parties to the appeal and it need not to be a suo motu action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well settled that the procedure is handmade of justice and justice should not be allowed to be choked only because of some inadvertent error o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

this behalf, as laid down by the Courts, is whether the Appellate Court is able to pronounce judgment on the materials before it without taking into consideration the additional evidence sought to be adduced. The legitimate occasion, therefore, for exercise of discretion under this rule is not before the Appellate Court hears and examines the case before it, but arises when on examining the evidence as it stands, some inherent lacuna or defect becomes apparent to the Appellate Court coming in 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

dditional evidence can be allowed to be taken on record, in the interest of justice, if something remains obscure should be filled up so that it can pronounce its judgment in a more satisfactory manner. 106. In T.N. Sahani (supra), the Apex Court (two- Judge Bench), has held that an application for leading additional evidence is to be decided alongwith the appeal. 107. In North Eastern Railway Administration, Gorakhpur v. Bhagwan Das (Dead) by LRs, (2008) 8 SCC 511, the Apex Court ((two-Judge Be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

llate Court should not travel outside the record of the lower court and additional evidence, whether oral or documentary is not admitted, but Section 107 CPC, which carves out an exception to the general rule, enables an appellate court to take additional evidence or to require such evidence to be taken subject to such conditions and limitations as may be prescribed. These conditions are prescribed under Order 41 Rule 27 CPC. 108. A Division Bench of the Madras High Court in T.M.S. Mohamed Abdul .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s would be relevant and admissible material in penalty proceedings. Even the statements recorded under section 161, Criminal Procedure Code, during the investigation, though unsigned by the maker thereof, may be relevant evidence. The only inhibition is that it cannot be pressed into service without supplying a copy thereof to the assessee so as to enable him to controvert, if he disputes the correctness of the contents thereof, if need be, by calling the maker for examination tendering his oral .....

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 against the conclusion of concealment, are matters exclusively for the primary authority and the appellate forum, as factfinding authorities. Therefore, the procedure adopted by the Appellate Tribunal is one of statutory compliance of section 274(1) but not "filling up gaps in the sense of a criminal trial." The Act itself makes a distinction in using the phraseology in the relevant provisions for prosecution or penalty, like section 276C(1) - "Wilful attempt to evade 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

power by the Appellate Tribunal is not hedged in by any limitation. As seen, the power of the Appellate Tribunal under section 254 is of wide amplitude. Therefore, it is permissible to adopt such procedure conducive to the circumstances of a case so warranted. 110. In view of the aforesaid decision, we find reliance on Maruti Udyog Limited (supra) to be misplaced, also for the reason that it came to be delivered in the attending facts and circumstances and distinguished in Rasiklal M. Parikh vs .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed. The Chartered Accountant appearing for the Assessee took time to rebut the same. Thus, adequate opportunity was afforded to the Assessee. Enough time (more than a fortnight) was afforded to the Assessee to rebut the same, which, for unexplainable reasons he chose not to do so. And the protest is also not with vehemence. No written application was filed opposing the same. No other remedy was taken recourse to. We find the Tribunal to have extensively dealt with the issue of accepting the docu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

justice stand violated. 113. Much reliance is placed on Andaman Timber Industries (supra), to highlight the point of lack of opportunity for cross-examining the witnesses. We do not find the decision to be applicable, for in the instant case statement was that of the Agent of the Assessee, in fact on whose return the Assessee seeks reliance upon. 114. The Tribunal has extensively dealt with the issue of (a) acts of the Assessee in filing the revised return to be not bonafide, for he was already .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ements dated 13.12.2011, 23.1.2013 and 11.2.2013 that of the Agent, so recorded during the course of proceedings of his assessment of return of income (Pages-111 to 137). 115. The Tribunal found the stand taken by the Assessee to be not correct, also for the reason that (a) the date of agreement, i.e. 17.6.2008, prima facie appeared to be fabricated, for the stamp papers inscribing the same, were printed and dispatched from the Indian Security Press, Nasik, only on 24.9.2008 and 14.3.2009, (b) b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ine, if not false. 116. It is in this backdrop, Tribunal found the inquiry conducted by the Assessing Officer not to be in accordance with law (Pages 137 to 148) and the view taken by the Officer not to be a plausible one (Pages 148- 153), holding that since it was a case of no inquiry , Commissioner rightly remitted the case back to the Assessing Officer, for carrying out assessment in accordance with law (Pages 153-158). 117. At this juncture, it be also observed that by the very same order, 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

claimed to have been incurred on one single day and that too in cash. We fail to comprehend as to how the assessment order accepting the genuineness of carrying out the agricultural operations and earning a huge income in such circumstances can be considered as an order made after proper inquiry as has been canvassed by the assessee… ……….. 118. Thus, in the given facts and circumstances, we hold the Tribunal to have correctly affirmed the order passed by the Commissi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es of law, after recording its satisfaction that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. The power is wide enough to take in its sweep the action of modifying, cancelling or directing fresh assessment, particularly when it is a case of no inquiry . We are of the considered view that no inquiry, as envisaged in law, was carried out, hence, question of the Commissioner taking an alternate possible view does not arise. The Assessing Off .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

He ought to have considered that the Assessee had sought to revise the return by declaring an income 1872% higher than what was originally returned and that too after action for scrutinizing the return was initiated. All transactions of sale of agricultural produce were in cash. Income declared was (a) disproportionately high only with respect to the relevant year and never in the preceding or succeeding years, (b) investment of huge amount of ₹ 3.8 crore was carried out by the Assessee hi .....

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 assessment, as such, the Commissioner was well within his right to pass an appropriate order of remission. 121. Scope of the Tribunal to examine correctness of the exercise of jurisdiction by the Commissioner is wide enough and not limited and restricted to the record as defined under clause (b) of sub-section (1) of Section 263 of the Act. In any case, even this definition is inclusive. It includes all records relating to any proceedings under the Act, be that of the Assessee or a third party .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

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