TMI Blog2022 (4) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... law. This is a clear case of sale of investment by the assessee and, further, even if ld. Pr. CIT was not satisfied with the detailed enquiry conducted by the AO, he should have done independent enquiry on its own so as to find an error in the enquiry conducted by the ld. AO in view of the ratio laid down in the case of DG Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] - No such finding is there in the impugned order and ld. Pr. CIT has only referred to the report of the Investigation Wing which was already put before the ld. AO and there is no other new material which could support the view of the ld. Pr. CIT holding the assessment order as erroneous and prejudicial to the interest of the Revenue. Firstly the issue raised in the show cause notice has been examined by ld. AO, being part of the reasons recorded for re-opening the case of the assessee and ld. AO after going various rounds and calling for various evidences and documents took the plausible view and accepted the transaction of ₹ 5,00,000/- received from sale of investment in equity shares as genuine. Secondly, ld. Pr. CIT erred in observing that ld. AO has not examined at all the issue of receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for selection of limited scrutiny was about the assessee being a beneficiary of unaccounted cash of ₹ 5,00,000/- and after appropriate enquiry, the assessment order was passed by taking a plausible view. 3. That, the Ld. Pr. CIT further erred in having held the assessment order u/s. 143(3)/147 erroneous and prejudicial to the interest of the revenue for alleged non-compliance of clause (a) of Explanation 2 to sec.263(1) of the Act in spite of the fact that the accounts of the appellant-NBFC were statutorily audited under the Companies as well as I.T. Act, the case was reopened on the basis of inputs received from DIT(Inv.) and after thorough examination of the related documents in respect of the assessee and YCL, the Ld. A.O. took a judicious view in the matter. 4. That, the Ld. Pr. CIT further erred in having invoked provisions of sec.263 of the Act in spite of the fact that he did not find any irregularity in the transaction with necessary details evidences and the impugned assessment was not a case of No Enquiry and none of the clauses of Explanation 2 to sec.263(l) stands fulfilled so as to render the assessee s case getting subjected to revision u/s.26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Hon ble Supreme Court (supra), we condone the delay of the assessee and proceed to hear the case on merits. 4. The Pr. CIT-5, Kolkata invokes the provisions of Section 263 of the Act and issued following show-cause notice to the assessee which is extracted for ready reference: Related to the. Assessment year 2010-2011, your case was completed u/s. 147/143(3) of the Income Tax Act, 1961 on 29/12/2017 at an assessed income of ₹ 20.097/- against the returned income of ₹ 20,097/-. In order to judge the merit of the order passed by the Assessing officer, the assessment records were perused. The records available revealed that an amount of ₹ 5,00,000/- was received from M/s. Igloo Vanijya Pvt. Ltd. against sale of Investment in share of M/s. Calcutta Gear Pvt. Ltd. by your concern which were not at all examined by the Assessing Officer while passing the assessment order u/s.143(3)/147 of the Income Tax Act, 1961. In view of the above facts, the order passed u/s. 147/143(3) of the Income Tax Act, 1961 on 29/12/2017 for Assessment Year 2010-2011 appears to be erroneous in so far as it is prejudicial to the interest of revenue on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said reasons recorded and notices issued u/s. 143(2) and 142(1) of the Act, the A/R of the appellant-company appeared on several dates of hearing and submitted written objections/explanations with the required information/evidences as per the said notices which, inter alia, included the following: Queries made during assessment proceeding Replies of the assessee with evidences Letter No. ITO/Wd- 15(l)/Kol/Reasons/2017-18/ 227 dated 18.10.2017 (P/B pages 1 2) As per information from DDIT(Inv.), there is cash deposit of ₹ 5,00,000/- in the account of Vridhi Fashion bearing A/c. No.037205002263 of ICICI Bank which is used for unaccounted trading and providing accommodation entries. On examination of the assessee s bank account, DDIT(Inv.) found frequent deposits of unaccounted cash and as per cash trail the same stood transferred to the accounts of different beneficiaries. Therefore, the high value cash deposit of ₹ 5,00,000/- on different dates during F.Y. 2009-10 was not commensurate with the assessee s return of income. Letter dated 13.11.2017 sent through Speed Post to the A.O. (P/B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A/R of the assessee company was asked to produce relevant documents as per notice u/s. 142(1). The A/R of the assessee submitted necessary particulars as per requisition. Books of accounts were also produced. The case was discussed and the A/R of the assessee was heard. On examination of information brought on record and during the course of hearing in connection with assessment proceedings u/s 147 of the I.T.Act, 1961 for the A.Y. 2010-11 the A/R furnished submission wherefrom it is known that the assessee company has sold shares during the year and sum received against sale of investment in shares of ₹ 5,00,000/- was included in sale ledger/bill as reported in the Profit Loss Account. On the above analysis of the case, perusal of the documents called for and furnished and considering the explanation of the A/R of the assessee, the Ld. A.O. considered it prudent to accept the sale of shares as genuine and consequently the assessment was completed on the income returned by the appellant. Therefore, the order passed by the A.O. is neither erroneous nor prejudicial to the interest of the revenue. 5.1. Ld. Counsel for the assessee submitted that the only issue ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, in view of the series of judicial pronouncements cited above in this connection, the order of the ld. Pr. CIT u/s 263 of the Act needs to be set aside on the above counts at the threshold and not to remit the matter for fresh consideration. 6. On merits of the case, it was submitted that ld. AO has carried out a detailed enquiry and other evidences as deemed fit and satisfied himself regarding the genuine receipt of ₹ 5,00,000/- through banking channel on sale of shares of the company. Adequate enquiry was made and reliance was placed on the following decisions: i) CIT vs. J.L. Morrison (India) Ltd. (2004) 366 ITR 593 (Cal). ii) CIT vs. R.K. Construction (2009) 313 ITR 65 (Guj). iii) CIT vs. Anil Kumar Sharma (2010) 194 Taxman 504 (Del). iv) CIT vs. Max India Ltd. (2007) 295 ITR 282 (SC). v) CIT vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom). vi) CIT vs. Deepak Mittal, 324 ITR 311 (P H). vii) Smt. Juthika Kar vs. ITO [ITA No.1128/Kol/2009, order dated 16.05.2012]. 7. It was also submitted that no independent enquiry has been made by ld. Pr. CIT on his own and has solely acted on the information received by the Investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO 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 ITO 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 [1968 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial question of law:- Whether the Tribunal is right in law and on facts in upholding the order passed by the CIT under section 263 of the Act on merits and still storing the issue of allowability of deduction under section 54 of the Act to the file of Assessing Officer even though the working of allowability of deduction under section 54F is available in the order under section 263 which is not disputed by the assessee before ITAT. 10.6. We find that the Hon'ble Delhi High Court in the case of CIT vs. Anil Kumar reported in 335 ITR 83 has held that where it was discernible from record that the A.O has applied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion. Relevant observation of the High Court reads as under: 63. We find the Hon'ble Delhi High Court in the case of Vikas Polymer reported in 341 ITR 537 has held as under: We are thus of the opinion that the provisions of s. 263 of the Act, when read as a composite whole make it incumbent upon the CIT before exercising revisional powers to: (i) call for and examine the record, and (ii) give the assessee an opportunity of being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. 64. Since in the instant case the A.O. after considering the various submissions made by the assessee from time to time and has taken a possible view, therefore, merely because the DIT does not agree with the opinion of the A.O., he cannot invoke the provisions of section 263 to substitute his own opinion. It has further been held in several decisions that when the A.O. has made enquiry to his satisfaction and it is not a case of no enquiry and the DIT/CIT wants that the case could have been investigated/ probed in a particular manner, he cannot assume jurisdiction u/s 263 of the Act. In view of the above discussion, we hold that the assumption of jurisdiction by the DIT u/s 263 of the Act is not in accordance with law. We, therefore, quash the same and grounds raised by the assessee are allowed. 10.7. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under Section 263. (i) The CIT must record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roneous. The finding recorded by the CIT is that order passed by the Assessing Officer may be erroneous . The CIT had doubts about the valuation and sale consideration received but the CIT should have examined the said aspect himself and given a finding that the order passed by the Assessing Officer was erroneous. He came to the conclusion and finding that the Assessing Officer had examined the said aspect and accepted the respondent s computation figures but he had reservations. The CIT in the order has recorded that the consideration receivable was examined by the Assessing Officer but was not properly examined and therefore the assessment order is erroneous . The said finding will be correct, if the CIT had examined and verified the said transaction himself and given a finding on merits. As held above, a distinction must be drawn in the cases where the Assessing Officer does not conduct an enquiry; as lack of enquiry by itself renders the order being erroneous and prejudicial to the interest of the Revenue and cases where the Assessing Officer conducts enquiry but finding recorded is erroneous and which is also prejudicial to the interest of the Revenue. In latter cases, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to fulfil the queries. Vide notice u/s,142(l) dated 15.06.2017 and during the course of assessment proceeding, the Ld. A.O. called for various documents and information. [As listed in the next column and hence not repeated here]. (1) In response to 142(1) notice, the assessee vide letter dated 14.12.2017 (P/B pages 06-49) submitted the following details/ documents: a) ITR Acknowledgement ITR in full set for AY 2010-11. b) Computation of income for A. Y. 2010- 11. c) The nature of business of the company is to finance and make investment in shares. d) Bank Statement showing the transaction. (2) Vide letter dated 18.12.2017 in response to 142(1) notice, the following documents/information were submitted (P/B pages 49-62): a) The company has no transaction with Vridhi Fashions. b) As per cash trail shown by the A.O., the company has received ₹ 5,00,000/- from M/s. Igloo Vanijya Pvt. Ltd. on 13.11.2009. The said amount was received against sale of investment in shares of M/s. Calcutta Gear Pvt. Ltd. to the said company. c) Copy of share sale bill dated 12.11.2009. d) Copy of Ledger of M/s. Igloo Vanijya Pvt. Ltd. e) Incorporation Certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o transactions were made with M/s. Vridhi Fashion. Copy of shares sale bill issued to M/s. Igloo Vanijya Pvt. Ltd., copy of incorporation certificate of M/s. Igloo Vanijya Pvt. Ltd., the ledger account, audited financial statement and bank statement of M/s. Igloo Vanijya Pvt. Ltd. showing the alleged transactions were filed and the copies of the same placed at page 50 to 63 of the paper book. In the assessment order u/s 143(3) r.w.s. 147 of the Act, ld. AO specifically mentioned the issue pertaining to alleged transaction of ₹ 5,00,000/- from sale of shares and after making a detailed enquiry and considering the documents received from the assessee from time to time, came to a conclusion that the alleged transaction is a genuine transaction of sale of shares as against the sale of investment assessee received consideration of ₹ 5,00,000/- and the same is supported by sufficient material evidences. 13. We, therefore, find that this is a clear case of complete and adequate enquiry conducted by the AO on the very same issue mentioned in the show cause notice issued u/s 263 of the Act and, further, ld. AO was satisfied with these documents and those documents have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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