TMI Blog2022 (6) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... . Pr. CIT erred in assuming jurisdiction u/s 263 - We, therefore, quash the impugned order of the ld. Pr. CIT u/s 263 of the Act and restore the order so framed u/s 143(3) - Hence, grounds of the appeal raised by the assessee are allowed. - I.T.A. No.: 510/Kol/2021 - - - Dated:- 27-4-2022 - Sri Sanjay Garg, Judicial Member And Sri Manish Borad, Accountant Member For the Assessee : Sh. S.K. Tulsiyan, Adv. And Ms. Mita Rizvi For the Revenue : Md. Ghayas Uddin, CIT(D/R) ORDER PER MANISH BORAD, ACCOUNTANT MEMBER: This appeal filed by the assessee pertaining to the Assessment Year (in short AY ) 2017-18 is directed against the order of ld. Pr. Commissioner of Income-tax-1, Kolkata [in short ld. Pr. CIT ] dated 06.10.2021 vide Document No. (DIN) ITBA/REV/F/REV5/2021-22/1036187833(1) which is arising out of the assessment order framed u/s 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 26.12.2019 by ACIT, Circle-8(2), Kolkata. 2. The assessee is in appeal before the Tribunal raising the following grounds: 1. That, on the facts and in the circumstances of the case, the Ld. Pr. C.I.T., Kolkata erred in law in assuming jurisdiction u/s.26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That, the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above grounds. 3. Brief facts of the case as called out from the records are that the assessee is a limited company. Income of Rupees NIL declared in the return of income on 07.11.2017 u/s 80IA of the Act. Case was selected for scrutiny and assessment u/s 143(3) of the Act was framed on 26.12.2019 assessing income at Rs.16,21,98,753/- computed by the Assessing Officer (in short ld. AO ) after disallowing deduction u/s 80IA of the Act. The assessee challenged the addition and the issues were carried on in the appellate proceedings. 3.1. In the meantime ld. Pr. CIT exercised the revisionary powers and issued the following notice u/s 263 of the Act dated 04.08.2021: Whereas the undersigned had called for and examined the record of your case and it is considered that the impugned assessment order passed u/s 143(3) of the IT Act, 1961 by the DCIT, Circle - 8(1), Kolkata on 20.12.2019 for A.Y. 2017-18at assessed income of Rs.16,21,98,753/- is, prima facie, erroneous in so far as it is prejudicial to the interests of the revenue for the following reasons: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that the assessee has not accounted for the sale consideration of land on which the building was constructed and was sold out by the assessee, Instead It seems that the sole value of land has been accounted on other accounts. Although the sale consideration consists of value of land, building and others as are mentioned above. The assessee should have deducted, the proportionate value of land and others from WDV of the land and others respectively which has not been done so. The assessing officer has also, not examined the issue during the course of the assessment completed u/s 143(3) of the act. 2. The AO has passed the 'Impugned 'assessment order without any application of mind nor conducting any enquiries or verifications which should have been made in this case. 3. Having regard to the facts and circumstances of the case and in law and in accordance with the provisions of Sec, 263(1) of I T Act, 1961 you are hereby given an opportunity of being heard to show cause as to why the Impugned assessment order passed u/s 143(3) by DCIT, Circle - 8(1), Kolkata on 26.12.2019 for A.Y. 2017-18 should not be held as erroneous in so far as it is prejudicial to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: 1. Decision in the case of Peerless General Finance Investment Company Ltd. v. Deputy Commissioner of Income-tax, Circle-3(1), Kolkata, 132 taxmann.com 80 (Kolkata - Trib.). 2. Decision in the case of Satish Kumar Lakhmani v. Principal Commissioner of Income Tax-10, Kolkata, [2021] 128 taxmann.com 264 (Kolkata - Trib.). 3. Decision in the case of Commissioner of Income-tax v. Sunbeam Auto Ltd [2011] 332 ITR 0167-Del. 4. Decision of Karnataka High Court in the case of M/s. Subhash Kabini Power, [2016] 69 taxmann.com 394 (Karnataka). 5. Decision of Karnataka High Court in the case of COMMISSIONER OF INCOME-TAX AND ANOTHER v. D. G. GOPALA GOWDA [2013] 354 ITR 501 (Kar). 5. Per contra, ld. D/R vehemently argued supporting the order of the ld. Pr. CIT. 6. We have heard rival contentions and perused the records placed before us. Through this appeal, the assessee has raised various grounds challenging the assumption of jurisdiction u/s 263 of the Act by ld. Pr. CIT and also challenging the finding of the ld. Pr. CIT that ld. AO has not made any enquiry on the issue mentioned in the show cause notice. 7. We find that on 26.04.1995 the assessee purchased a land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue, 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- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. 8.2. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) has laid down following ratio with regard to provisions of section 263 of the Act: There can be no doubt that 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order should be erroneous and also prejudicial to the interests 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 interests 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. 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. Our view is fortified by the judgment of Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi, [2016] 71 taxmann.com 272 (Bombay). 8.5. 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. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of examining and investigating the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were I.T. assessees and the unsecured loan taken from M/s Stutee Chit Finance (P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee. 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, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be erroneous simply because in his order he does not make an elaborate discussion in that regard. 9. Now, in light of the above settled judicial position, we have to examine firstly, whether the order of the ld. AO is erroneous, secondly, whether it is prejudicial to the interests of the Revenue and thirdly, whether ld. Pr. CIT has conducted necessary enquiry on merit before giving direction to the AO for framing the assessment in light of the finding in the order u/s 263 of the Act. As far as, for the assessment order not to be erroneous in nature it needs to be examined that whether the ld. AO has conducted enquiry with regard to the issue raised in the show cause notice u/s 263 of the Act. In the instant case the issue is computation of capital gain on sale of land, building and furniture. On the basis of purchase deed dated 26.04.1995, it is crystal and clear that consideration of Rs.1.55 crore was paid for purchase of land at Rs.1.20 crore and building at Rs.0.35 crore. There was a single purchase deed and not a separate deed for land and building. Similarly, as per the sale deed dated 08.03.2017 the assessee company sold the land and building together to M/s. Tech Prec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23,88,143 - Sale Proceeds 12,40,00,000 STCG 27,31,810 Less:- B/F STCL for AY 2015-16 27,31,810 Balance O/S - Hence, the sale consideration of Rs.12,40,00,000/- has been fully considered while computing the income. 9.1. All these details filed by the assessee which has been called for by the ld. AO on various occasions along with other details including Audited Balance Sheet and Tax Audit Report ensure the fact that the ld. AO has thoroughly examined the said transaction of sale of land, building and furniture by going through the purchase deed, sale deed, calculation of capital gain, written down value appearing in the balance sheet, notes attached to the balance sheet and the details of sales of land, building and furniture appearing in the Form No.-3CD attached to the Tax Audit Report u/s 44AB of the Act. Thus, we are satisfied tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 Long term capital gain 4,58,23,836 Loss of earlier A.Ys [as shown in Return of Income for AY 2017-18 enclosed at pages 71-72 of the Paperbook] B/f Long term capital loss of earlier years 4,70,10,675 Less: Adjustment with Long term capital gain of Current year 4,58,23,836 Total loss c/f to future years 11,86,839 Computation of Short term Capital Gain on sale of Building Proportionate sale consideration 2,79,99,920 Less: WDV of building as on 01/04/2016 11,88,80,047 Short term capital loss -9,08,80,127 Loss of earlier A.Ys [as shown in Return of Income for AY 2017-18 enclosed at pages 71-72 of the Pape ..... X X X X Extracts X X X X X X X X Extracts X X X X
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