TMI Blog2019 (12) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... nge, all related evidences have been filed. There is no adverse material regarding transactions carried out by the assessee. There is no specific finding/statement of any third party against the assessee. It is also stated that name of the assessee nowhere figures in any of the statement. Under these facts, Ld. Pr. CIT was not justified in invoking the provisions of section 263. Since the A.O. has treated the transaction as long term capital gain, therefore, in light of the judgement of DG HOUSING PROJECTS LTD [ 2012 (3) TMI 227 - DELHI HIGH COURT] Pr. CIT should have brought some material rebutting the view adopted by the A.O., which has not been done. The issue is simply restored to the A.O. for making enquiry. For this reason, action of the CIT cannot be sustained. Hence, grounds raised in the appeal are allowed. The impugned order is quashed. Appeal filed by the assessee is allowed. - ITA No.511/Ind/2019 - - - Dated:- 29-11-2019 - SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER Appellant by : Shri Ram Gilda, A.R. Respondent by : Smt. Ashima Gupta, D.R. ORDER This appeal by the assessee is directed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rroneous in so far as it is also prejudicial to the interest of the revenue on account of passing the order without making required enquiries/investigations. 3. Aggrieved against this, the assessee is in present appeal. Ld. Counsel for the assessee reiterated the submissions as made in the written submissions. For the sake of clarify, submissions of the assessee are reproduced as under: 1. That the show cause notice dt: 05/03/2018 for launching prosecution u/s 276C and 277 was issued as per page no. 1 of paper book. 2. That the reply to the above referred notice was filed requesting to drop the prosecution as penalty u/s 271(1)(c) was dropped by assessing officer on 30/06/2017. 3. On the basis of the above reply, the prosecution proceeding was dropped. 4. Thereafter the show-cause notice u/s 263 dt 18/07/2018 was issued. 5. That the show-cause notice dt: 18/07/2018 u/s 263 was issued for the following reasons ( para no. 1 of order u/s 263 on page no. 3 4 of appeal filed). a. Order passed without making proper enquirer d investigations. b. Disallowance should be treated as income from other sources u/s 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the insertion of explanation 2 of section 263 of the Act. It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, 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 interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous, when a view has already been taken after enquiry. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. This is fortified by the decision of Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi, [2016] . (copy enclosed on page no 60 to 65.) This view is further supported by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial 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; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent-if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue- recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when 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 11. It is also settled law, that assessment order and assessment records cannot contain each cash and every details of assessment. Since the A.O. has not made any mention about the verification of these documents; the assessment order does not becomes erroneous and prejudicial to the interest of the revenue. The Hon' ble Bombay High Court in the case of CIT vs. Gabriel India Ltd. 203 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to the interest of the revenue , is specifically stated to be effective from 1st June 2015. It is clearly a provision adverse to the interests of the assessee and is specifically stated to be prospective in effect... . Judicial precedent ceases to be a binding precedent when it is passed per incurium i.e. in ignorance of a previous decision of its own or of a coordinate jurisdiction which covered the issue. The amendments made to Section 263 by the Finance Act 2015 will, therefore, hold good only in respect of the revision orders on or after 1st June 2015, whereas the impugned revision order was passed on 11 March 2014. As for the law in force at the relevant point of time, for the detailed reasons set out earlier, the cases of inadequate inquiry, even if that be so, will continue to be outside the ambit of scope of section 263. 14. The Id. Principal Commissioner has relied upon various judicial decisions. It is submitted that that decisions relied upon by the Id. Principal Commissioner relates to the cases where no enquiry was made or enquiry was made without application of mind by the A.O. during the course of the assessment proceedings but that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment, which was required to be added u/s 68 of the Act and chargeable to tax u/s 115BBE of the Act. It is contended by the Ld. Counsel for the assessee that the A.O. has taken one of the plausible view. Therefore, Ld. Pr. CIT is not justified in exercising jurisdiction u/s 263 of the Act. Ld. Counsel for the assessee has relied upon various case laws in support of his contention to buttress the argument that the investment made in the share of company namely Turbo Tek Engineering Ltd. has been treated as the genuine transaction by the coordinate bench of the Tribunal in the case of Miss Asha Luthra Vs. ITO in ITA No.6483/Del/2017. Ld. Counsel for the assessee also placed reliance on the decision of the SMC bench of this Tribunal in the case of Sikha Dhawan Vs. ITO and Sri Lali Kumar Agrawal Vs. ACIT. It is stated that under these facts, the A.O. was justified in treating the transaction as long term capital gains. The law is well settled that power conferred u/s 263 of the Act can be exercised where the order is erroneous, so far it is prejudicial to the interest of the revenue. Therefore, there has to be satisfaction of two conditions, firstly, the assessment order sought to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT [see CIT v. Shree Manjunathesware Packing Products Camphor Works [1998] 231 ITR 53 / 98 Taxman 1 (SC). Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. 18. It is in this context that the Supreme Court in Malabar Industrial Co. Ltd. V. Commissioner of Income Tax, [2000] 243 ITR 83/109 Taxman 66 (SC), had observed that the phrase prejudicial to the interest of 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 the Assessing Officer cannot be treated as prejudicial to the interest of Revenue. Thus, when the Assessing Officer had adopted one of the courses permissible and available to him, and this has resulted in loss to Revenue; or two views were possible and the Assessing Officer has taken one view with which the CIT may not ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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