TMI Blog2020 (11) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... time and delay in filing of Form 10 was condoned by the ld. CIT(E), we are of the view that the twin conditions mentioned u/s 13(9) of the Act was satisfied. It is not the case of the revenue that the original return of income was not filed within the due date of filing as specified u/s 139(1) - AO has considered the legal position and has taken a possible view after application of mind. Assessing Officer was bound to consider the original return of income which was filed in time as well as the Form 10 filed after condonation of delay by the ld. CIT(E) and grant exemption to the assessee. He did so in the assessment order passed u/s 143(3) of the Act on 31/10/2018. He took a possible view. Such view cannot be considered as an order which causes prejudice to the revenue - the order passed u/s 263 is bad in law and without jurisdiction - Decided in favour of assessee. - ITA No. 2643/Kol/2019 - - - Dated:- 30-9-2020 - Sri J. Sudhakar Reddy, Hon ble Accountant Member AND Sri S.S. Godara, Hon ble Judicial Member) For the Appellant : Shri Soumitra Choudhury, Advocate Shri Ratan Kr. Goel, A/R For the Respondent : Shri Ram Bilash Meena, CIT, D/R ORDER Per J. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm 10 for the said assessment years could not be filed in time since registration u/s. 12AA of the Income Tax Act, 1961 was granted on 09.12.2016. However, the assessee is an institute of eminence engaged in preparing future legal professionals wants to avail opportunities of setting apart of fund for future utilisation. The fund was, in fact, invested in accordance with the provisions of section 11 (5) of the Income Tax Act, 1961. In this regard, the assessee referred to the CBDT's Circular No. 273 dated 03.06.1980. Considering the merits of the case and in accordance with CBDT's Circular, in exercise of powers conferred by sub-clause (b) of clause 2 of section 119 of the I. T. Act, 1961 and all other powers enabling in this behalf, the petitions for condonation of delay u/s. 119(2)(b) of the Income Tax Act, 1961 for the assessment years 2014-15, 2015-16 2016-17 are allowed. However, no interest is allowed to be provided while processing the belated return. 3.1.1. Thereafter, the assessee filed a revised return of income on 29/11/2017 along with Form 10B. Thereafter, notice u/s 142(1) of the Act dt. 11/09/2018, was issued to the assessee. Another notice u/s 143(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Udyog vs. Pr. CIT in ITA No. 1073/Kol/2012; Assessment Year 2005-06, order dt. 28/11/2018, for the proposition that invocation of revisionary jurisdiction on a proposal to do so made by the Assessing Officer, is bad in law. 4.1. On merits, he submitted that the CBDT vide its Circular No. 6/2006 dt. 19/02/2020, Notification No. F. No. 197/55/2018-ITA-1, authorizing the Commissioner of Income Tax to admit belated applications for condonation of delay in filing of the return of income u/s 119(2)(b) of the Act and decide the same on merits. He pointed out that the ld. CIT(E) had condoned the delay in filing of From No. 10 for the Assessment Years 2014-15, 2015-16 2016-17, u/s 119(2)(b) of the Act. He further pointed out that approval u/s 10(23C)(vi) of the Act was granted on 27/09/2016. He took this Bench through the order of the Assessing Officer passed u/s 143(3) of the Act, dt. 31/10/2018 and submitted that all aspects have been considered by the Assessing Officer and a reasoned order passed by taking a possible view and under these circumstances, the ld. CIT(E) was wrong in exercising his jurisdiction u/s 263 of the Act. He pointed out that the Assessing Officer has taken a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing proposals:- In this case the return for the A.Y-2016-17 was assessed u/s. 143(3) of the I.T. Act, 1961 on a total income of Rs. Nil on 31.10.2018. Later it was revealed that the assessee claimed set apart of fund u/s. 11 (2) of the Act for an amount of ₹ 17,04,30,176/-. However, the requisite Form-10 was not submitted online within the due date i.e. 17.10.2016. In this case the delay in filing Form-10 was condoned by Ld. CIT(Exemption), Kolkata vide his order dated 20.11.2017. However, as per provisions of section 13(9) of the Act both the return of income and Form-10 are required to be submitted on or before the due date of filing return as prescribed u/s 139(1) of the Act. In the instant case, the delay in filing Form-10 though was condoned by the Ld. CIT, the delay in filing return of income stands late. Hence the assessee is not eligible for the benefit of exemption u/s. 11(2) of the Act. In view of the above, it is evident that the order passed u/s. 143(3) of the Act as above is erroneous in so far as it is prejudicial to the interest of revenue as per Section 13 (9) of the Act. Under the circumstances I request your honour to kindly initiate proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on we rely on the decision of the Tribunal in the case of Shantai Exim Ltd. Vs. CIT (2017) 88 taxmann.com 361 (Ahd. Trib.) and the decision of ITAT, Mumbai Bench in the case of Ashok Kumar Shivpuri Vs. CIT for AY 2008-09 dated 07.11.2014. Therefore, we find merit in the contention of the Ld. AR and we quash the very usurpation of jurisdiction u/s. 263 of the Act by the CIT. Therefore, the appeal filed by the assessee is allowed. Similar view was taken by the Kolkata Bench of the Tribunal in the following cases:- M/s. Luxmi Township Holding Ltd. vs. CIT; ITA No. 468/Kol/2019; Assessment Year 2014-15, order dt. 2014-15. Bangiya Gramin Vikash Bank vs. Pr. CIT in ITA No. 877/Kol/2015, Assessment Year 2010-11, order dt. 12/05/2017. Ambo Agro Products Ltd. vs. Pr. CIT, in ITA No. 676/Kol/2016, Assessment Year 2009-10, order dt. 19/05/2017. 9. Applying the proposition of law laid down in this regard in the case law referred above, to the facts of the case on hand, we have to hold that the order passed u/s 263 of the Act is bad in law for the reason that, the jurisdiction u/s 263 of the Act, was invoked by the ld. CIT(E) based on the proposals of the Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erate so as to exclude any income from the total income of the previous year of a person in receipt thereof, if- (i) the statement referred to in clause (a) of the said sub-section in respect of such income is not furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year; or (ii) the return of income for the previous year is not furnished by such person on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the said previous year.] 16[Explanation 1.-For the purposes of sections 11, 12, 12A and this section, trust includes any other legal obligation and for the purposes of this section relative , in relation to an individual, means- (i) spouse of the individual; (ii) brother or sister of the individual; (iii) brother or sister of the spouse of the individual; (iv) any lineal ascendant or descendant of the individual; (v) any lineal ascendant or descendant of the spouse of the individual; (vi) spouse of a person referred to in sub-clause (ii), sub-clause (iii), sub-clause (iv) or sub-clause (v); (vii) any lineal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 3. Aggrieved by the said order the assessee took up the matter in appeal before the Dy. CIT(A) and it was submitted that the AO was not justified in rejecting the application under s. 154 of the Act as the default in filing Form No. 10B along with return was merely a procedural formality. The learned Dy.CIT(A), however, held that the prima facie adjustment was rightly done in the light of the circular ofthe Board as the assessee failed to file Form No. 10B along with the return which was mandatory. The assessee also cited the decision of the Hon'ble Calcutta High Court in the case of CIT vs. Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal) and the subsequent decision in the case of CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust (1992) 195 ITR 825 (Cal) for the proposition that if the audit report was not filed along with the return of income, the return became defective and the AO was required to give an opportunity to the assessee to submit the audit report and rectify the defect before completing the assessment. Reliance was also placed on the decision of the Tribunal in the case of Calcutta Management Association vs. ITO (1992) 42 ITD 62 (Cal) wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Officer is erroneous in so far 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; 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 it is prejudicial to the Revenue recourse cannot be had to Sec.263 (1) of the Act. It also held at pg-88 as follows: 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 the 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner simply because, according to him, the order should have been written differently or more elaborately; that the section does not visualize the substitution of the judgment of the Commissioner for that of the Income Tax Officer, who passed the order unless the decision is not in accordance with the law; that to invoke suomotu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suomotu revisiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ask for fresh inquiry. 28. In Gabriel India Ltd. (6 Supra), the Bombay High Court held that a consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. It held that the Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new versions which they present as to what should be the inference or proper inference either of the facts disclosed or the weight of the circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted; that to do so is to divide one argument into two and multiply the litigation. It held that cases may be visualized wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders were pre-judicial to the interest of the Revenue; and no prejudice was caused to the assessee on account of failure of the Commissioner to indicate the results of the enquiry made by him, as she would have a full opportunity for showing to the income tax officer whether he had jurisdiction or not and whether the income tax assessed in the assessment years which were originally passed were correct or not 31. From the above decisions, the following principles as to exercise of jurisdiction by the Commissioner u/s.263 of the Act can be culled out: a) 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 erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue recourse cannot be had to Sec.263 (1) of the Act. b) Every loss of revenue as a consequence of an order of the 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 Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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