TMI Blog2017 (8) TMI 1432X X X X Extracts X X X X X X X X Extracts X X X X ..... h has been done by the A.O. have not been specifically rebutted by the Department. - Decided in favour of assessee - D.B. Income Tax Appeal No. 47/2011, D.B. Income Tax Appeal No. 243/2011, D.B. Income Tax Appeal No. 275/2011, D.B. Income Tax Appeal No. 524/2011 - - - Dated:- 29-8-2017 - Mr. K. S. Jhaveri And Mr. Inderjeet Singh JJ. For the Appellant(s) : Mr. Sameer Jain with Mr. Daksh Pareek For the Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana JUDGMENT 1. By way of these appeals, the department has challenged the judgment and order of the tribunal whereby the tribunal has dismissed the appeal of the department and confirmed the order of CIT(A) and in other appeals, proceedings under Section 263 are quashed by the Tribunal. 2. This court while admitting the appeals has framed following substantial questions of law:- D.B. Income Tax Appeal No.47/2011 admitted on 23.05.2013 Whether on the facts and in the circumstances of the case, the Hon ble ITAT is justified in law in upholding the decision of CIT(A) setting aside the fresh assessment order dated 27.07.2009 passed u/s 263/143(3), even when the appeal u/s 260A against ITAT s order dated 25.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had loan of ₹ 14,20,000/- from M/s Indian Art Palace. M/s Indian Art Palace is a family partnership firm having assessee s brothers, uncles and cousins as partners. M/s Indian Art Palace was in existence since long and was in the same business as is the assessee even today. For the assessment year 2003-04 the assessee started his business but he had no machinery of his own, no business premises of his own and no sufficient capital of his own. All these business in-puts were contributed by M/s Indian Art Palace, the old existing family concern of the assessee. He started his business in the same business premises where very old firm M/s Indian Art Palace was carrying the business. He used the same old machinery belonging to M/s Indian Art Palace, for which he paid rent to that concern. He also paid rent for the business premises separately to M/s Indian Art Palace. Assessee purchased own machinery towards the end of the initial year of his business which was after he had started his business by using machinery of M/s Indian Art Palace. Assessee claimed 10% deduction of his profit u/s 80-IB for the A.Y.2003- 04 as well as for the A.Y. 2004-05. As is evident from the seq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in support of its eligibility of exemption claimed under section 80-IB of the Act were filed :- (1)Copy of registration granted by DLC which clearly shows that the business startged w.e.f. 26.08.2002 and is a new unit having SSI registration No. 172307630 (P.B. Page 3). (2) It is a manufacturing unit not started by splitting up of existing unit. (3) New machinery has been installed. Copies of machinery purchases bills were submitted (P. B Page 18 24) (4) The unit is manufacturing wooden and other handcrafts items which are not covered by the list in the Eleventh Schedule. (5) Copy of Export License w.e.f. 2.09.2002 issued by Ministry of Commerce. Govt. of India bearing No. ICE-1303006111 dated 2.9.2002. (P. B. Page1 ). (6) Copy of registration certificate granted by CTO. Sikar bearing TIN No. 08971353204 w.e.f. 26.8.2002. P. B. Page 4 ). (7) Copy of Muster roll register for payment to labours. Thereafter, the Tribunal has recorded that AO examined the above documents and evidences filed by the assessee as well as books of account and further raised the following queries:- (i)That it is not practically possible for the assessee to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be termed transferred to a new business or plant previously used for any pourpose. We thus find that the allegations, on the basis of which the ld. CIT had held the assessment order in question on the issue as erroneous and prejudicial to the interest of revenue dislodged by the ld. A/R as discussed above, have not been specifically rebutted by the ld. D/R before us. Under these circumstances, we are of the view that the ld. CIT was not justified in treating the assessment order in question as erroneous and prejudicial to the interest of the revenue. We are also of the view that a revisional order passed under section 263 of the Act cannot also be justified, on the because, ld. CIT while setting aside the issue to the file AO for fresh consideration on the issue has given opportunity to the assessee to represent its case before the AO unless the above stated requirements of the provisions are fulfil. We thus while setting aside the revisional order in question, allow the grounds in favour of the assessee. 14. In the result appeal is allowed. 10. After going through the above finding of the Tribunal, it is clearly seen that the Tribunal has examined the issue on meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed by ld. CIT (A). This is also not in dispute that the facts are identical for A.Y. 2003-04 to 05-06. Deduction under section 80- IB has already been granted by the order of the Tribunal for A.Y. 2005-06. Therefore, we are of the considered view that ld. CIT(A) was correct in allowing the appeal of the assessee for these two years in respect to deduction claimed under section 80-IB. Accordingly, the order of the ld. CIT (A) are confirmed. 6. In that view of the matter, learned counsel for the appellant contended that the Tribunal has seriously committed an error in dismissing the appeal. He has also taken us to the Appeal No.243/2011 where it has been pointed out that the AO has passed the order on 29.11.2006. The order passed under Section 263 was taken on 16.02.2009 and after the remand on 27.07.2009 and tribunal has passed an order subsequently, therefore the order of Tribunal will not be implemented since proceedings under Section 263 is exhausted in the order of CIT(A). 7. In that view of the matter, the order of the Tribunal has no legal validity in view of the order passed by the CIT(A). 8. He has also contended that:- After receiving the proposal on 13.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (2015) 56 taxmann.com 214 (Allahabad) wherein it has held as under:- 9. In Pullangode Rubber Produce Co. Ltd. v. State of Kerala, (1973) MANU/SC/0386/1971 : 91 ITR 18, the Supreme Court held that an admission is a piece of evidence though it is not conclusive. Consequently, a statement made voluntary under Section 133A of the Act cannot be retracted unless the asses-see files evidence to show that the admission made in the statement at the time of survey was wrong and against the material on record. The mere fact that the Commissioner of Income Tax in his report has held that the statement given by the petitioner was on oath and therefore, it cannot be retracted is immaterial in the context of what we have said aforesaid. 10. No doubt, Sections 132(4) and 133A of the Act are distinct and different. Under Section 133A of the Act, there is no provision to administer oath and to take a sworn statement whereas under Section 132(4) of the Act there is no provision to examine a person on oath. But it does not mean that a statement under Section 133A of the Act can be retracted at the whim and fancy of the assessee. In the light of the aforesaid, the assertions made by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue' is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not conferred to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy Co. v. S.P. Jain Anr. MANU/WB/0263/1956 : [1957] 31 ITR 872 (Cal) , the High Court of Karnataka in CIT v. T. Narayana Pai MANU/KA/0017/1974 : [1975] 98 ITR 422 (KAR) , the High Court of Bombay in CIT v. Gabriel India Ltd. MANU/MH/0220/1993 : [1993] 203 ITR 108 (Bom) and the High Court of Gujarat in CIT v. Smt. Minalben S. Parikh MANU/GJ/0177/1994 : [1995] 215 ITR 81 (Guj) treated loss of tax as prejudicial to the interests of the revenue. 6. Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company v. CIT MANU/TN/0138/1981 : [1987] 163 ITR 129 (Mad) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein it has been held as under:- 5. To consider the first contention, it will be apt to quote section 263(1) which is relevant for our purpose : 263. Revision of orders prejudicial to revenue - (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the assessing officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation - * * * A bare reading of this provision makes it clear that the prerequisite to exercise of jurisdiction by the Commissioner suo moto under it, is that the order of the Income Tax Officer is erroneous insofar as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 7. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the assessing officer. Every loss of revenue as a consequence of an order of assessing officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income Tax Officer is unsustainable in law. It has been held by this court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the assessing officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue. Rampyari Devi Saraogi v. CIT MANU/SC/0177/1967 : [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties. 18. Before proceeding with the matter, whether the Tribunal was right in setting aside the order under Section 263 which has been passed by the CIT(A), that question has been considered by the Tribunal in Appeal No.243/2011 and the same was argued by Mr. Sameer Jain. The Tribunal while discussing the issue has relied upon different decisions of the High Court and after considering in detail has come to the conclusion that while invoking the provisions under Section 263 of the Act, the assessment order is prejudicial to the interest of revenue. The subsequent proceedings which took place on 24.09.2008 could not be relied upon. Taking support of Section 263 (1)(b), the concept of record is the record which was available with the A.O. at the time of assessment. If the contention which has been raised by Mr. Jain is taken into consideration, no assessee will be assessee. If the subsequent events to the assessment order is taken into consideration then the scope of Section 263 will be enlarged. In that view of the matter, we are of the opinion that the record which was available with the A.O. is required to be taken into consideration and the tribunal while considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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