TMI Blog2022 (7) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... e company sought permission for disposal of surplus land of 11.02 acres from the Government of India to redeem the mounting financial burden and also to generate funds needed for its revival.The Government of India gave permission in Assessment Year 2006 for the sale of land, but the sale of land could not be completed in Assessment Year 2006-07 due to State Government's intervention for buy-back. Since the assessee company could not pay bank dues as demanded by the State Bank of India and other bankers, SBI, on behalf of consortium of banks, issued a notice dated 18.04.2009 to the company u/s. 13(3) of SARFEASI Act requiring the company to discharge its full dues and attached the assets including the freehold surplus land mortgaged to the extent of 11.02 acres. A conspectus understanding of the underlying facts clearly show that sale/transfer of land is effected by SBI under the SARFEASI Act and it has to be understood clearly that the assessee company has not sold/transferred the land of its own. It is known to everyone that SBI is a bank created by the Act of Parliament who has taken possession of the land of the assessee company and the action of the SBI is akin to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 3. The representatives of both the sides were heard at length, the case records carefully perused. 4. Briefly stated, the facts of the case are that the assessee company e-filed its return of income on 26.11.2014 declaring income of Rs. 6,24,10,490/- which was processed u/s. 143(1) of the Act. Return was selected for scrutiny under CASS and, accordingly, statutory notices were issued and served upon the assessee. 5. The Assessing Officer framed the assessment order u/s. 143(3) of the Act on 08.12.2016 by accepting the returned income. Invoking the powers conferred upon him by provisions of section 263 of the Act, the PCIT, Central -3 issued a notice to the assessee which reads as under: Office of the Pr Commissioner of Income Tax (Central)-3, 325, 3rd Floor, ARA Centre, E-2, Jhandewalan Extn., New Delhi-110055, + 23593426 F. No: PCIT(C)-3/263/2018-19/30V2- Date: 19.03.2019 To The Principal Officer M/s. H.T.L Ltd. 8, Commercial Complex, Masjid Moth, Greater Kailash-II New Delhi-110048 Sir, Sub: Proceedings u/s. 263 of the Income Tax Act, 1961 for the Assessment Year 2014-15- M/s. H.T.L Ltd. (PAN: AAACH5516P) -reg. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. A perusal of the aforesaid notice clearly shows that the PCIT was unaware of the relevant provisions of SARFEASI Act, 2002. We are of the considered view that before issuing notice u/s. 263 of the Act and before assuming jurisdiction thereupon, the PCIT ought to have gone through the underlying facts of the case in hand. If the PCIT had gone through the records of the assessee, he would have come to know that the accumulated losses of the assessee were more than the paid up capital and free reserves, the assessee company became a sick company as per the provisions of Sick Industrial Companies Act [SICA] and was referred to the Board of Industrial and Financial Reconstruction [BIFR] u/s. 15(1) of the SICA [Special Provisions] Act declaring the company as a sick industrial company. 6. In 2006, the assessee company sought permission for disposal of surplus land of 11.02 acres from the Government of India to redeem the mounting financial burden and also to generate funds needed for its revival. 7. The Government of India gave permission in Assessment Year 2006 for the sale of land, but the sale of land could not be completed in Assessment Year 2006-07 due to State Government& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arket value of land as on the date of sale. 15. We find that vide notice dated 22.2.2016, the Assessing Officer raised 50 queries. The relevant query for the case in hand reads as under: Details with supporting evidence in respect of short term capital pain/loss and long term capital gain/loss. 16. The assessee replied as under: Short Term Capital gain - Nil LT Capital gain - See computation , however reproduced below Rs. Long term capital gain (Sale of land by S8I under SARFAESI Act) Sale consideration received by SBI 272,29,08,000 Less: Cost of acquisition - Actual cost - amount paid in 1973 2,83,989 Other expenses 5,011 2,89,000 Fair market value as on 1.4.1981 taken at 15,00,000 Indexed cost of acquisition for 2013-14 140,85,000 (15,00,000x939/100) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions erroneous , erroneous assessment and erroneous judgment have been defined in Black's Law Dictionary. According to the definition, erroneous means involving error; deviating from the law . Erroneous assessment refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, erroneous judgment means one rendered according to course and practice of court, but contrary to law, upon mistaken view of law; or upon erroneous application of legal principles . 12. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it is prejudicial to the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income-tax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court it would be open to the courts to examine whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment order were to incorporate the reasons for upholding the claim made by an assessee, the result would be an epitome and not an assessment order. In this case, during the assessment proceedings for both the Assessment Years, the Assessing. A.Y. 2009-10 Officer issued a query memo to the assessee, calling upon him to justify the genuineness of the gifts. The Respondent-Assessee responded to the same by giving evidence of the communications received from his father and his sister i.e. the donors of the gifts along with the statement of their Bank accounts. On perusal, the Assessing Officer was satisfied about the creditworthiness/capacity of the donors, the source from where these funds have come and also the creditworthiness/capacity of the donor. Once the Assessing Officer was satisfied with regard to the same, there was no further requirement on the part of the Assessing Officer to disclose his satisfaction in the Assessment Order passed thereon. Thus, this objection on the part of the Revenue cannot be accepted. 22. We find that the Hon'ble Delhi High Court in the case of CIT Vs Sunbeam Auto reported in 332 ITR 167 has held as held as under: 12. We have co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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