TMI Blog2022 (11) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessment order in the present facts are not passed under the instructions of the superior authority or under the direction of the superior authority, but merely an approval was granted by the Joint Commissioner of Income Tax under Section 153D of the Act to pass the orders. Provisions of Section 153D speak about prior approval for assessment in the case of search . The section also provide for obtaining the prior approval of the Joint Commissioner for merely passing an order. Thus if the argument of the AR is to be accepted then in such cases where the assessment has been framed under Section 153A or Section 153C, the same will go out of the ambit of the provisions of Section 263 of the Act and such a view cannot be even considered to be a plausible view in the eye of law. Provisions of Section 263 of the Act give un-fettered right to the Commissioner of Income Tax to revise any order passed by the AO - Whatever was to be excluded by the law has already been provided under that Section and the only exception are the issues 'decided and considered' in the appellate orders. Therefore, the reasoning of the arguments advanced by the AR in respect of Ground no.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is self-explanatory in terms of the parties to whom payments have been made in cash as well as cheque towards construction. In the present facts of the case, the order passed by the Ld.AO may be prejudicial however, it cannot be held to be erroneous and the Ld.AO had adopted one of the possible view. Respectfully following the ratio laid down by Hon ble Supreme Court case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT ] we hold the revisionary proceedings initiated in the present facts to be bad in law and quash the consequential order passed dated 22/03/2022. - ITA No. 435/Bang/2022 - - - Dated:- 21-9-2022 - Shri. Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri V. Srinivasan, Advocate For the Revenue : Shri Praveen Karanth, CIT DR ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against order dated 22/03/2022 passed by Ld.Pr.CIT u/s. 263 for A.Y. 2018-19 on following grounds of appeal: 1. The order of revision passed by the learned Principal Commissioner of Income tax [Central], Bengaluru, under Section 263 of the Act dated 22/03/2022, in so far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords and documents and explanation pertaining to the matter at hand, the same being produced by the appellant during various instances during the assessment proceedings and further as per the provisions of section 153D of the Act an approval has been sought for passing the order of assessment and having applied their mind and considering the facts the order of assessment has been passed. Hence on the very same issue no action can be taken under Section 263 of the Act as the actions of the Assessing Officer is pursuant to applying his mind to the matter and in accordance with law. 8. The Appellant craves leave to add, alter, substitute and delete any or all the grounds of appeal urged above. 9. For the above and other grounds to be urged during the hearing of the appeal, the Appellant prays that the appeal be allowed in the interest of equity and justice. 2. Brief facts of the case are as under: 2.1 Search seizure action U/s. 132 of the IT Act was carried out in the case of M/s. Mukka Sea Food Industries P Ltd and also at the residence of assessee on 08.2.2018. The assessee filed his return of income for the A.Y 2018-19 on 29.3.2019 declaring total income of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome on account of cash payment for the construction of house for AY 2018-19. 4. The admitted income was not declared by you in the return of income filed for AY 2018-19. During assessment proceedings, it was submitted that the additional income admitted during search proceedings on account of cash expenses was declared in the return of income as commission received under the head 'Income from other sources'. The Assessing officer accepted the contention and assessment order was passed accordingly. 5. In the return of income filed for AY 2018-19, an amount of Rs.67,24,595/ - was declared as commission under the head 'Income from other sources' including the undisclosed cash expenses declared during search proceedings. Examination of case records revealed that no further details was submitted regarding receipt of commission. As such, the sources of receipts declared as commission remained unexplained and should have been brought to tax as per the provisions of Section 68 rws 115I3BE of Income Tax Act. 6. Since the AO failed to tax the commission income u/s 68 r.w.s 115BBE of Income Tax Act, the assessment order is erroneous and prejudicial to the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere change of opinion. It is settled law that the mere change of opinion or view would not enable the CIT to exercise jurisdiction u/s. 263 of the Act more so, when the AO had considered the details and the explanation offered by the assessee. Change of opinion by reappraising the evidence is not within the parameters of revisional jurisdiction of the Commissioner under section 263 of the Act. Further to attract the provisions of section 68 as alleged in the notice U/ s. 263 the primary condition of a sum found credited to books of the assessee is not satisfied. Hence provisions of section 68 do not apply. Even assuming that the provisions of section 68 is applicable, the income is not assessable under section 68 as both the nature and source is explained as the receipt is in the nature of income and source is the commission received. The provisions of section is applicable if the assessing officer is not satisfied with explanation provided, but in the instant case, the assessing officer as well as the approving authority are satisfied with the nature and source explained. In view of the above, I submit that the order is not erroneous in so far as it is prejudicial to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld.AR that under such circumstances, the review proceedings is bad in law. 4. He placed reliance on the following decisions in support. Decision of Hon ble Delhi Tribunal in case of Smt. Abha Bansal Others vs. Pr.CIT in ITA Nos. 383 to 386/Del/2021 by order dated 31/05/2021 Decision of Hon ble Pune Tribunal in case of M/s. B.U. Bhandari Schemes vs. Pr.CIT in ITA Nos. 637 to 643/PUN/2018 Decision of Hon ble Lucknow Tribunal in case of Mehtab Alam vs. ACIT in ITA Nos. 288 to 294/LKW/2014 by order dated 18/11/2014 5. On the contrary, the Ld.DR submitted that there is no embargo on the Ld.PCIT to initiate the revisionary proceedings under this statute. He submitted that 263 can be initiated in respect of any order passed by an assessing officer which is found to be erroneous in so far as prejudicial to the interest of the revenue if the Ld.PCIT is satisfied after having verified the records merely because the assessment order is passed after taking necessary approval u/s. 153D will not estop the Ld.PCIT from initiating proceedings u/s. 263 of the Act. The entire reliance of the Ld.DR was on the relevant provision as enacted in the statute for the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.7.1996 for the assessment year 1995-96. 3. These appeals were admitted on the question of law, which we have corrected as follows:- Whether on the facts and in the circumstances of the case, the Tribunal was justified in interfering with the order of the Commissioner of Income Tax, Under Section 263 of the Act, for the assessment years 1991-92 to assessment years 1995-96? 4. We have gone through the order of Assessing Officer, Commissioner Income Tax (A) and Income Tax Appellate Tribunal and find that the ITAT has considered the reasons given by the CIT(A), and has found that the assessee had sufficiently explained the surrender of the income which he has subsequently retracted. 5. After assessments were completed, a raid was carried out, at the Nursing Home of the respondent- assessee on 7.12.2004. Some incriminating documents of concealment of income, were discovered. The assessee was not present at the time of inspection. He appeared before the AO on 12.12.1994 and surrendered the proposed additions in the income for the relevant years. The respondent- assessee thereafter retracted his statement, by giving an explanation that he did not have access to hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of A.O. 8. We find that the Tribunal has considered the relevant principles of law in interfering with the order of CIT. The Tribunal found that the assessee-respondent had sufficiently explained the retraction of his statement given on 12.12.1994. It also found that the CIT could not point out as to whether the AO had failed to work out the amount of concealed income correctly. The AO had made additions on estimate basis for all the assessment years. There was no material indicating suppression of receipts. 9. We find that the Tribunal has not committed any error of law in setting aside the order of CIT passed under Section 263 of Income Tax Act for the assessment year 1991-92 to 1995-96. 10. The question of law is decided against the revenue and in favour of assessee. The Income Tax Appeals are accordingly dismissed. 5.3 Therefore, in our view, the basis on which the decision in case of Abha Bansal(supra) has been rendered stands factually distinguished. Section 263 of the Act reads as under: 263. (1) The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may call for and examine the record of any proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer or the Transfer Pricing Officer, as the case may be, shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. Explanation 3.-For the purposes of this section, Transfer Pricing Officer shall have the same meaning as assigned to it in the Explanation to section 92CA. (2) No orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the Assessing Officer. Therefore, if the argument of the Ld. AR is to be accepted then in such cases where the assessment has been framed under Section 153A or Section 153C, the same will go out of the ambit of the provisions of Section 263 of the Act and such a view cannot be even considered to be a plausible view in the eye of law. Provisions of Section 263 of the Act give un-fettered right to the Commissioner of Income Tax to revise any order passed by the Assessing Officer. Whatever was to be excluded by the law has already been provided under that Section and the only exception are the issues 'decided and considered' in the appellate orders. Therefore, the reasoning of the arguments advanced by the Ld. AR in respect of Ground no.3 falls without any legs to stand. 5.6 Hon'ble Delhi High Court in NIIT Ltd. Vs. Union of India in WPC No. 172-179/2009 dated 11th December, 2009 held that:- 20. The legal position which cannot be disputed is that when a particular authority is vested with the power to discharge statutory function, like the Commissioner who is empowered to pass orders under Section 263 of the Act, it is that authority which is to apply i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders passed by the Income-tax Officer pursuant to the directions of the Inspecting Assistant Commissioner under section 144B which was then included in the Act. 3. The High Court in its decision has followed its earlier decision in which it had referred to and relied upon the reasoning of several other High Courts on the same issue to negative the contentions of the assessee. Given the uniformity of interpretation by the several High Courts, it would not be appropriate to interfere with the decision of the High Court. 4. In any event we are of the view that having regard to the subsequent amendments to the Act issued from time to time there was no scope for limiting the phrase 'order passed by the Income-tax Officer' in section 263 to exclude orders passed by the Income-tax Officer on the directions of a superior authority either under section 144A or 144B. 5.10 The power of the Commissioner under Section 263 of the Act is in the nature of supervisory jurisdiction. This power is granted to correct an error, which is prejudicial to the interest of the Revenue in the order of the Assessing Officer, even if it is approved by the Joint Commissioner, who is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 9 Mahabala 05.08.2017 4,00,000 9 Mahabala 15.01.2018 3,86,000 7 Gulshan Roy 19.10.2017 2,50,000 7 Gulshan Roy 05.12.2017 2,50,000 4 Mahabala 05.08.2017 4,00,000 3 Mahabala 03.11.2017 6,28,727 3 Mahabala 13.12.2017 5,20,000 1 Mahabala 02.12.2017 50,000 Total 28,84,727 7.2 In the statements recorded u/s 132(4) and 131 of the IT Act assessee had admitted that the cash payments appearing in the books seized have not been accounted and offered this amount of Rs.28,84,72 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. 10. We note that the Ld.AO during the assessment proceedings observed the declared income having reduced to Rs.24,84,727/- and the same has been put to the assessee and Ld.AO had called for explanation. Hon ble Supreme Court in case of Malabar Industrial Co. Ltd. vs. CIT (supra) in such facts observed as under: A bare reading of this provision makes it clear that the prerequisite to exercise of jurisdiction by the Commissioner suo moto under it, is that the order of the Income-tax Officer is erroneous insofar 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 is prejudicial to the revenue-recourse cannot be had to Section 263(1) 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 or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue; 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 taken by the Income-tax Officer 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 Vs. Commissioner of Income-tax [67 ITR 84] and in Smt. Tara Devi Aggarwal Vs. Commissioner of Income-tax, West Bengal [88 ITR 323]. 11. In view of the above discussion, we are of the view that the Ld.PCIT is not justified in set aside assessment order passed u/s. 143(3). The Ld.AO had conducted enquiry based on the return filed in lieu of the notices issued post search action. A specific query has been raised as to why the amount offered by assessee at the time of recording statement u/s. 132(4) stands reduced by a sum of Rs. 4 Lakhs in response to which reply has been furnished by assessee which has been accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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