TMI Blog2017 (1) TMI 1645X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment under Section 147 of the Income Tax Act. Reassessment can only be done within a period of four years but where the search is carried out, reassessment can be done within a period of six years. No doubt Sections 153B and 153C lay down different time limitations for making the assessment but these time limits are for making initial assessments by the Assessing Officer pursuant to the search and seizure operations. Once those assessments are made if the powers under Section 263 of the Income Tax Act are invoked by the Commissioner then we will have to fall back on the provisions of Section 153(2)A of the Income Tax Act which provides that when the Commissioner invokes the powers under Section 263 of the Income Tax Act then the fresh assessment order in terms of the Commissioner has to be passed within a period of one year from the date of communication of the order. If the argument of Learned Counsel for the Appellant is accepted, it would virtually amount to deleting Section 263 in cases of reassessment on the basis of search and seizure. When an order is passed under Section 263 it is a fresh order and limitation has to be reckoned from the date of that order. The Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and seizure operations conducted in the office premises of Shri Sunil Kumar Agrawal, Chartered Accountant, pass books of all 232 share holders of these 13 Shell Companies were found in his office. The Bank Accounts were held in two banks only. The addresses of Shell Companies were almost identical. The Assessing Officer issued notices to these Shell Companies under Section 153C of the Act, and also issued a questionnaire. It would also be relevant to refer to question (vi) of the questionnaire which reads as follows: ( vi) Details of the share capital, share premium account and share application money, if any, which appears as liability in the balance sheet. Please furnish the complete name, address, occupation of the investor and the date and mode of receipt of the funds. Also furnish the compliance made in this regard to the Registrar of Companies. 3. The Companies were also asked to submit explanation in the following terms: 3. You are also hereby asked to furnish explanation/submission with reference to the following points: ( I) Details of liability appearing in the balance sheet in form of subscribed share capital, share premium and share applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has declared total income of Rs. NIL. The case was selected for scrutiny by issue of notice U/s. 143(2) dt. 05/12/2011 and questionnaire alongwith notice U/s. 142(1) were issued upon the assessee on 21/10/2011 and duly served. During the course of assessment proceedings, Shri Sunil Kumar Agrawal, CA and AR of the assessee, attended and filed a written submission giving parawise reply to the questionnaire. The assessee company is incorporated on 13/08/2004 which is evident from the copy of the Certificate of Incorporation filed. The assessee company was required to explain the basis of determining his income and furnish information relating to affairs of his business which was done through compliances made during assessment proceedings. Subject to the above the income of the assessee as shown in the return is accepted. Income Assessed : Rs. NIL 5. It would also be pertinent to mention that notices under the Income Tax Act, 1961 were also issued to M/s. Prime Ispat Limited which moved the Settlement Commission of the Income Tax authorities at Calcutta and the Settlement Commission, vide its order dated 07.11.2012 with regard to Shell Companies held as follows: 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .08 Crores had been added to the income of Shri B.L. Agrawal and therefore, action could not be taken under Section 263 of the Act, especially when the Assessing Officer after sending a detailed questionnaire has accepted the case of the assessees. We are not at all in agreement with these submissions. 8. To appreciate the rival contention of the parties, it would be apposite to refer to Section 263 of the Act, relevant portion of which reads as follows: 263. (1) The CIT may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the AO 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. 9. The Bombay High Court in Commissioner of Income Tax v. Gabriel India Ltd., {(1993) 203 ITR 108 Bom) held as follows:- The power of suo motu revision under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 11. A Division Bench of the Madras High Court in Mofussil Warehouse and Trading Co. Ltd. v. Commissioner of Income-tax, {(1999) 238 ITR 867 (Mad)} was dealing with a case where the assessee company paid amounts to the holding company by way of reimbursement in relation to the utilization of the service of the employees of the holding company. The Assessing Officer had not taken into consideration the exact nature of the claim or the unreasonableness thereof. The Madras High Court held that non performance of such a duty cast upon the Income-tax Officer entitled the Commissioner to invoke his power under Section 263. Relevant observation of the Madras High Court reads as follows:- The non-performance of such a duty on the part of the Income-tax Officer culminated in distortions and prejudices to the Revenue. Such distortions and prejudices to the Revenue for being set right, the Commissioner of Income-tax invoked his power under Section 263 and in exercise of such power he cancelled the assessment passed by the Income-tax Officer with a direction to him to make a fresh assessment, according to law. 12. The Apex Court in Malabar Industrial Co. Ltd. v. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration . In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income Tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 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 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the Commissioner under Section 263 are very wide. However, two conditions have to be met before the Commissioner can exercise his powers under this section. The order sought to be reviewed should be erroneous and should also be prejudicial to the interest of the revenue. In Malabar Industrial Co. Ltd. V. Commissioner of Income-tax (supra), the Apex Court held that both the conditions must be satisfied and if only one of the conditions is satisfied recourse cannot be had to Section 263. It is also apparent that recourse to Section 263 cannot be taken to correct every small error or mistake committed by the Assessing Officer. However, if the order itself is erroneous the provisions of the section would be attracted. The Apex Court has made it clear that even incorrect assumption of facts would satisfy the requirement of order being erroneous. In case the orders are passed without applying the principle of natural justice or without application of mind then also the Commissioner can exercise his revisional powers. It is important to note that the Apex Court in Malabar Industrial Co. Ltd. v. Commissioner of Income-tax (supra) further held that the expression prejudicial to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to be conducted in this matter and therefore, we are clearly of the view that no question of law arises in these appeals. 18. In view of the above discussions, the appeals are dismissed in limine. 2. The aforesaid judgment squarely covers these cases also. We could have easily disposed of these cases on the basis of the earlier order but now applications for amendment have been filed in these cases, in which another ground has been raised. 3. It would be pertinent to mention that when the tax appeals were filed on 18.10.2016, the grounds raised were identical to the grounds raised in Tax Case No.69 of 2016 and other connected cases. After this Court dismissed those appeals on 25.10.2016, the applications for amendment have been moved on 19.12.2016. It is more than obvious that purpose of moving these amendment applications is only to circumvent the earlier judgment passed by us. These applications were not moved bonafide. Furthermore, the only point raised in these amendment applications is that reassessment cannot be done since the period of limitation has expired. This ground was never raised before the Income Tax Appellate Tribunal nor in the original w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment or reassessment in case of other person referred to in section 153C, shall be the period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed or nine months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later. The first part deals with the persons against whom search has been made and the assessment has to be completed within two years from the end of the assessment year in which the search was carried out. As far as other persons to whom notices were issued is concerned, their assessment had to be completed within a period of 21 months from the end of the assessment year in which the search was carried out. The search was carried out on 4.2.2010. The assessment year ended on 31.3.2010 and 21 months period expired on 31.12.2011. In the present cases, the assessment were made on 30.12.2011 and it is not disputed that these assessments were within time. 6. Thereafter, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operations carried out in terms of Section 153A of the Income Tax Act. 9. We are not at all in agreement with the submission of Learned Counsel for the Appellant. Non-obstinate clause of Section 153B and 153C of the Income Tax deals mainly with the extending the period for which the Income Tax Act can carry out the assessment and reassessment under Section 147 of the Income Tax Act. Reassessment can only be done within a period of four years but where the search is carried out, reassessment can be done within a period of six years. 10. No doubt Sections 153B and 153C of the Income Tax Act lay down different time limitations for making the assessment but these time limits are for making initial assessments by the Assessing Officer pursuant to the search and seizure operations. Once those assessments are made if the powers under Section 263 of the Income Tax Act are invoked by the Commissioner then we will have to fall back on the provisions of Section 153(2)A of the Income Tax Act which provides that when the Commissioner invokes the powers under Section 263 of the Income Tax Act then the fresh assessment order in terms of the Commissioner has to be passed within a period of o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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