TMI Blog2018 (4) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... d ITA NO.5599/Mum/2014 - - - Dated:- 20-3-2018 - SHRI R.C.SHARMA, AM AND SHRI RAM LAL NEGI, JM For The Assessee : Shri D. Nishant Thakkar For The Revenue : Shri Santanu Kumar Saikia ORDER PER R.C.SHARMA (A.M): ITA No.2490/Mum/2014 This is an appeal filed by assessee against the order of CITMumbai dated 28/03/2014 passed u/s.263 for the A.Y.2009-10. 2. Following grounds have been taken by the assessee:- 1 . Invocation of s.263 of the Act The learned DIT(E) erred on facts and in law in applying s.263 of the Act to the facts of the case for A.Y.2009-10, by passing the impugned order dated 28 March,2014. The impugned order be held null and void. 2. The impugned order neither erroneous nor prejudicial The learned DIT(E) erred on facts and in law not appreciating that the order sought to be revised is neither erroneous nor prejudicial to the interests of the Revenue. The impugned order be held null and void. 3. We have gone through the orders of the authorities below and found that in its order u/s.263, CIT observed that the Assessing Officer (AO) has assessed the total income at ₹ 528,65,24,460/-. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained in section 11 or section 12 shall operate so as to exclude any income from the total income of the previous year of the person in receipt thereof if the provisions of the first proviso to clause (15) of section 2 become applicable in the case of such person in the said previous year, 6. In this connection, during the AY 2009-10, the MHADA has shown income of ₹ 114.48 Crs out of sale of houses etc. In addition to this the MHADA has also earned income by way of lease rent, Tenancy deposits etc., which are commercial activities. 7. It is also seen on perusal of the order u/s.!43(3) of the Income Tax Act, 1961 passed by the AO that the above proviso to the provision of section 2(15) of the Income Tax Act, 1961 was not considered while framing the said order u/s 143(3) of the Income Tax Act, 1961. Hence, it appears that to this extent the order is erroneous in nature. In short, the assessment has been made by only following the disallowances made in the earlier year. Since, the AO has framed the assessment order by ignoring the newly inserted provisions of the Act it appears to be an erroneous order. Further, it appears by invoking a wrong section to make a dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the result would be same, that is, again the entire assessment would be completed on the same income of ₹ 83,98,10,894/-. There would be no deviation of the income at all what was assessed originally u/s 143(3) and the income which is now being sought to be assessed as per the order of the Ld. DIT. In such a situation, two aspects needs to be seen, firstly, whether the assessment order which has been completely merged with the order of the Tribunal can be set aside by the Ld. DIT u/s 263; and secondly, whether the impugned order can be considered to be erroneous in so far as it is prejudicial to the interest of the revenue, because even after giving effect to the impugned order, there is no revenue effect. 10. On both counts, we are inclined to agree with the contention of the Ld. Senior Counsel. Because, firstly, when the entire basis of the assessment and the whole of the surplus amount has been challenged before the CIT(A), then the entire assessment order including taxing of the entire exempt income u/s 11 is the subject matter of appeal and there is complete merger with the order of the CIT(A) within the terms and ambit of section 263 read with clause (c) Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has invoked power u/s.263 on the plea that AO has not considered proviso to Section 2(15) while deciding the case, accordingly, he was directed to consider proviso to Section 2(15). We found that the order passed by the AO while giving effect to the direction of CIT, the assessed income comes to the very same figure at which it was originally assessed by the AO vide order dated 27/12/2011. Thus, the assessed income as per the original assessment dated 27/12/2011 vis- -vis assessed income as per the order passed u/s.143(3) r.w.s. 263 dated 30/10/2015 comes to the very same figure of ₹ 528,65,24,460/-. Accordingly, we observe that no prejudice has been caused to the Revenue in terms of assessed income and tax thereon. Once it is held that no prejudice has been caused to the Revenue, invocation of powers u/s.263 was not justified, in so far as twin condition of Section 263 with regard to order of AO being erroneous as well as prejudicial to interest of revenue is not complied with. Respectfully following the decision of the Co-ordinate Bench as narrated above, we do not find any merit in the order so passed by CIT u/s.263. 13. In the result, appeal of assessee is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. 18. We have considered rival contentions and carefully gone through the orders of the authorities below and found that CIT(A) has dismissed assessee s appeal merely on the plea that the order of the AO against which assessee is in appeal has already been set aside by CIT u/s.263 of the IT Act, therefore, the appeal filed by the assessee becomes non-est because of being dependent and flowing from the assessment order which is set aside by the CIT. However, we have allowed assessee s appeal in ITA No.2490/Mum/2014 against the order passed by CIT u/s.263, only on the technical plea that both the conditions of Section 263 being order of the AO erroneous as well as prejudicial to the interest of Revenue has not been satisfied. So far as merit of applicability of proviso to Section 2(15) is concerned, we had not given any of our verdict. Therefore, in the interest of substantial justice, we set aside the order of CIT(A) and restore the matter back to the file of CIT(A) for deciding afresh after considering the proviso to Section 215 introduced w.e.f. A.Y.2009-10. We also observe that CIT(A) has got coterminous powers with that of AO, therefore, what the AO has failed to do, he is c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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