TMI Blog2018 (2) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... espect to the claim of interest expenditure had been thoroughly examined by the Assessing Officer by calling for the specific details and the explanations on the issue involved - the revision proceedings u/s. 263 of the Act even with respect to the interest expenditure directing the AO to re-examine the same is incorrect and unjustified. - Decided in favour of assessee - ITA No.3125/Mum/2017 - - - Dated:- 19-1-2018 - SHRI R.C.SHARMA, AM AND SHRI SANDEEP GOSAIN, JM For The Assessee by Shri Dharmesh Shah and Shri Dhaval Shah For The Revenue : Shri C.S.Gulati ORDER PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT-6, Mumbai dated 23/03/2017 for A.Y.2012-13 in the matter of order passed u/s.263 of the IT Act. 2. In this appeal assessee has challenged revision by Ld. CIT on the issue of land development charges amounting to ₹ 50,60,000/- given to Smt. Sumitraben Chauhan. The Ld. CIT has revised the order passed u/s. 143(3) of the Act by the Assessing Officer on 21.11.2014, by directing him to re-examine the same afresh. 3. It was contended by learned AR that the issue has been thoroughly examined by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined by the Assessing Officer, proceedings u/s.263 of the Act could not be taken up. 8. It was further submitted by learned AR that even the nature of enquiries directed by CIT does not justify disallowance of expenses in so far as expenditure so incurred for earning income which was fully supported by documentary evidence and actual payment made for the same. 9. Learned AR has also relied on the decision of Hon ble Bombay High Court in case of CIT v. Nirav Modi (390 ITR 292). In the said case, the issue was whether in a case where the Assessing Officer has examined the gift received by the assessee and accepted the same as genuine, whether it was correct on the part of the Ld. CIT to direct the Assessing Officer for re-examination of the said issue u/s. 263 of the Act. The observation of the Hon'ble Bombay High Court was as under: (a) The powers u/s. 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions viz. the assessment order should be erroneous and prejudicial to the revenue. This power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind out whether earlier order passed by him was erroneous. 10. Thus, with the above observations, the Hon'ble Bombay High Court observed and held the revision proceedings u/s. 263 of the Act were invalid. 11. On the other hand, learned DR relied on the order of CIT and contended that AO has not examined properly payment made for purchase of Hard Murram. There is nothing on record to suggest that Smt. Sumitraben Chauhan is a regular supplier of 'Hard Murram'. Learned DR further contended that the payment to the said party was outstanding at the end of the year. Learned DR also invited our attention to the observation made by CIT to the effect that It was necessary to verify as to from whom Smt. Sumitraben Chauhan had purchased 'Hard Murram' and whether any payment was made by her to that supplier. 12. The Ld. DR had also relied upon the following decisions to support the order of Ld. CIT: a. Pragati Financial Management (P) Ltd. v. CIT [82 Taxmann.com 12 (Cal.)] b. Anuj Jayendra Shah v. Pr. CIT [67 Taxmann.com 38 (Mum.)] c. Rajmandir Estates (P) Ltd. v. Pr. CIT [77 Taxmann.com 285 (SC]. 13. We have considered rival contentions and ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d his purview. 17. Moreover, while passing order u/s. 263, no enquiry has been caused by Ld. CIT to find out whether the order passed by the Assessing Officer and his satisfaction with respect to the correctness of the claim of the assessee is found to be erroneous. In view of the finding of the Hon'ble Bombay High Court, unless Ld. CIT himself make relevant enquiries and determines the order to be erroneous, the provisions of s. 263 cannot be invoked. Thus, the ratio of the aforesaid decision of the Hon'ble Bombay High Court squarely applies to the facts of the present case and the order passed by Ld. CIT deserves to be quashed. We also found that the SLP against the aforesaid decision of the Hon'ble Bombay High Court filed by Revenue has been dismissed by the Hon'ble Supreme Court in CIT v. Nirav Modi [389 ITR (St.) 42]. 18. Hon'ble Mumbai Tribunal in the case of Narayan Tau Rane v. ITO [70 taxmann.com 227], at para 19, observed that Ld. CIT should show that the view taken by the Assessing Officer is unsustainable in law. The Hon'ble Tribunal further observed that the action of the Ld. CIT in directing the Assessing Officer to conduct enquiry in a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inance Act, 2015, the Ld. CIT had power to conduct further enquiry even in a case where inadequate enquiries have been conducted by the Assessing Officer. (a) Crompton Greaves Ltd v. CIT [ITA No. 1994/Mum/2013] dated 01.02.2016. (b) Madhurima International Pvt Ltd v. Pr. CIT [ITA No. 421/Mum/2017] dated 28.04.2017. 23. In this regard, we observe that the aforesaid judgments have been later considered by Hon'ble Mumbai Tribunal in several other cases. Further, in the recent judgments, the Hon'ble Tribunal has taken a view that the provisions to Explanation 2 to s. 263 of the Act introduced by the Finance Act, 2015 is prospective in nature and would not apply to the year under consideration as follows: (a) AV Industries v. ACIT [ITA No. 3469/Mum/2010] dated 06.11.2015. (b) Metacaps Engineering and Mahendra Constructions Co. (JV) v. CIT [ITA No. 2895/Mum/2014] dated 11.09.2017 (c) Reliance Money Infrastructure Ltd. v. PCIT [ITA No. 3259/Mum/2017] dated 06.10.2017. (d) Shantikrupa Estate Pvt. Ltd. [ITA No. 1252/Ahd/2015] dated 09.09.2016 (e) Amira Pure Foods Pvt. Ltd. v. PCIT [ITA No. 451/Del/2017] dated 29.11.2017. 24. In ground no.3, the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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