TMI Blog2020 (10) TMI 1349X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A r.w.s. 143(3) of the Act, dt. 30/03/2016, was passed, was not revised and is a valid and legal order. Even otherwise, in this case, we find that the ld. Pr. CIT, without making any enquiries on his own, in a mechanical manner has set aside the matter to the file of the Assessing Officer for fresh adjudication. Such general restoration of the matter to the file of the Assessing Officer, without the ld. Pr. CIT making any enquiry by himself or forming any opinion on the issue, is not permitted in law. This is not a case where there is no enquiry. As per the ld. Pr. CIT, this is a case of inadequate enquiry. See JL. MORRISON (INDIA) LTD. [ 2014 (6) TMI 154 - CALCUTTA HIGH COURT] , CHROMA BUSINESS LIMITED. [ 2003 (10) TMI 256 - ITAT CALCUTTA-C] and SUNBEAM AUTO LTD. [ 2009 (9) TMI 633 - DELHI HIGH COURT] Thus we hold that the revision in question is bad in law. Hence, we quash the order passed u/s 263 - Decided in favour of assessee. - ITA No. 1853/Kol/2018 - - - Dated:- 22-10-2020 - Sri J. Sudhakar Reddy, Hon ble Accountant Member Sri Aby T. Varkey, Hon ble Judicial Member Shri Miraj D. Shah, A/R, appeared on behalf of the assessee. Shri Imokaba Jamir, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, Shri Miraj D. Shah, submitted that during the assessment proceeding, the Assessing Officer had called for details by issuing notice u/s 142(1) of the Act, dt. 17/08/2015. He drew the attention of the Bench to the Questionnaire issued by the Assessing Officer during the original assessment proceedings, specifically to point no. 14 and the reply given to this query by the assessee and submitted that the Assessing Officer had called for all the information and details of expenditure incurred and that the assessee has furnished the same. He submitted that the Assessing Officer has, after examining these details had come to a conclusion that the expenditure is genuine and was incurred for the purpose of business and then only had allowed the same. He further submitted that the accounts of the assessee has been audited u/s 44AB of the Act and this audited expenditure was accepted by the Assessing Officer as genuine and as expenditure incurred wholly and exclusively for the purpose of business while passing the assessment order u/s 143(3) of the Act on 30/03/2016. 4.1.He relied on a number of case-law for the proposition that the order passed u/s 263 of the Act, under such circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined as to whether this expenditure has been incurred wholly and exclusively for the business of the company. He argued that merely giving a notice and calling for information and putting the information in the assessment folder does not lead to a conclusion that the expenditure was examined by the Assessing Officer. He also disputed the claim of the assessee that once books of account are audited, it has to be considered that the expenditure incurred is genuine and incurred for the purpose of business. He submitted that the Assessing Officer has the right and duty to examine the genuineness of an audited expenditure. He submitted that the Assessing Officer has mechanically collected information without verifying the same and without applying his mind to the information collected, has accepted the claims of the assessee. He relied on the order of the ld. Pr. CIT and submitted that, non-application of mind and non-verification of the claim made by assessee is an error which is prejudicial to the interest of the revenue and that under those circumstances, the ld. Pr. CIT has rightly invoked his powers u/s 263 of the Act. On the arguments made by the ld. Counsel for the assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d dividend u/s 2(22)(e). However, while according his approval in terms with section 153D, Addl. CIT, who is range head directed Assessing Officer not to make addition u/s 2(22)(e). The reasoning of the Addl. CIT is, advance created in the name of assessee was only through book entry and no payment was made and secondly, there was no accumulated profits of the company, which is a prerequisite for invoking provisions of section 2(22)(e). Therefore, from the aforesaid discussion, it becomes clear that not only Assessing Officer has examined the issue, but, he has also passed the order in consequence to the directions of his higher authority in terms with section 153D of the Act. ITAT, Pune Bench in case of Akil Gulamali Somji Vs. ITO in ITA Nos. 455 to 458/PN/2010 dt. 30/03/2012 while holding the conditions imposed u/s 153D to be of mandatory nature, referred to clause 9 of Manual of Office Procedure, Volume II (Technical) February 2003 issued by Directorate of Income-tax on Ch. Krishna Murthy behalf of CBDT, which reads as under: 9. Approval for assessment : An assessment order under Chapter XIV-B can be passed only with the previous approval of the range JCIT/ADDL.CIT. (For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, journal entries passed in the books of account by converting the outstanding liability of the newly formed company as advance given to assessee will attract provisions of section 2(22)(e). In this context, he has relied upon a decision of the ITAT Chennai Bench and another decision of Hon'ble Madras High Court in case of T. Sundaram Chettiar and Another Vs. CIT, 49 ITR 287. From the aforesaid discussions of learned CIT, it is apparent and obvious that the issue whether the advance can be treated as deemed dividend u/s 2(22)(e) at the hands of assessee is a debatable issue on which more than one view are possible. Therefore, when the view taken by Addl. CIT and Assessing Officer can be considered as one of the possible views, assessment order cannot be treated as erroneous, even though there may be some prejudice caused to revenue. One more aspect, which needs to be taken note of is learned CIT while revising assessment order and directing Assessing Officer to treat the amount of Rs. 4,27,36,648 as deemed dividend at the hands of assessee has totally failed to examine whether M/s VCPL at the time of alleged payment was having accumulated profits or not. When learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under:- 25. We find that assessment order u/s.143 r.w.s.153A of the Act was passed after getting approval of ACIT as per provisions of section 153D of the Act. We find that the order u/s.143A r.w.s. 153 of the Act cannot revise without revising the approval of ACIT. We find that as per the decision of Hon'ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar in I.T. Appeal No.192 of 2000 wherein it is held that the assessment order approved by the 23 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 ACIT u/s.153D of the Act cannot subject to revision u/s.263 of the Act. The learned DR could not file any evidence to show that such permission was revised by ACIT in present case, therefore, CIT cannot revise the order passed by AO u/s.153 of the Act. As per section 153A of the Act. 26. Tribunal in case of Trinity Infra ventures Ltd v. DCIT CC 2(1) in ITA Nos. 584589/Hyd/2015 dated 04.12.2015 wherein, the Hon'ble Tribunal has held that the assessment order passed u/s 143(3) r.w.s. 153A of the Act cannot be revised without revising the approval of Addl. CIT: 5.4. The Ld. Counsel for the assessee has further submitted that the assessment under section 143(3) read wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of the Tribunal in the case of MehtabAlam (Supra) held that CIT is not justified in assuming jurisdiction u/s.263 when the order has been passed in terms of section 153D of the Act. 14.2 We find the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. (Supra) had an occasion to decide an identical issue and it held that the assessment order approved by the Addl.CIT u/s.153D cannot be subject to revision u/s.263 of the I.T. Act. The relevant observation of the Tribunal at Para 5.4 of the order reads as under. 28. Since in the instant case also the Assessing Officer has passed the order after obtaining necessary approval from Addl.CIT u/s.153D of the I.T. Act, therefore, respectfully following the above-mentioned decisions of the Coordinate Benches of the Tribunal we are of the considered opinion that the CIT has no power to revise the order u/s.263 of the I.T. Act in the instant case since the same has been passed with the approval of the Addl.CIT u/s.153D of the I.T. Act. We respectfully following the decision of ACIT Vs. Dr. Ashok Kumar, ITA 192 of 2000. We find that in the instant case the original approval was granted by Addl. CIT and this ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fra Ventures Ltd. (Supra) had an occasion to decide an identical issue and it held that the assessment order approved by the Addl. CIT u/s. 153D cannot be subject to revision u/s. 263 of the I.T. Act. The relevant observation of the Tribunal at Para 5.4 of the order reads as under: 5.4. The Ld. Counsel for the assessee has further submitted that the assessment under section 143(3) read with section 153C was passed after getting approval of Addl. CIT under section 153D of the I.T. Act and therefore such an assessment cannot be revised without revising the directions of the Addl. CIT under section 153D of the I.T. Act. The Ld. Counsel for the assessee, has relied upon the decisions of this Tribunal in the case of Ch. Krishna Murthy v. ACIT, C.C. 3, Hyderabad in ITA. No 766/Hyd/2012 dated 13.02.2015 and also the decision of Lucknow Bench of ITAT in the case of Mehtab Alam 288/Luck/2014 dated 18.11.2014 in support of this contention. He has also placed reliance upon the decision of Hon'ble Allahabad High Court in the case of CIT v. Dr. Ashok Kumar in I.T. Appeal No. 192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT under section 153D, canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer passed assessment order under section 143(3) accepting assessee's claim that said amount was to be treated as capital receipt - Commissioner passed a revisional order mainly on ground that amount received from German Company was to be taxed as 'income from other sources' - Tribunal, set aside revisional order - It was noted that in terms of contract, assessee was not entitled in any event, upon expiry of contract, to prevent German Concern from setting up it 100 per cent subsidiary for purpose of manufacturing and marketing its goods and, thus, payment in question was a gratuitous payment - Even otherwise, if it was assumed that by agreeing to issue NOC, assessee agreed to have its manufacturing and trading structure impaired resulting in loss of his source of income, receipt in that case would be a capital receipt - Whether in view of aforesaid, Tribunal was justified in setting aside impugned revisional order- Held, yes CIT vs. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del.) Section 263 of the Income-tax Act, 1961 - Revision - Of order prejudicial to interest of revenue - Assessment year 2001-02 - Whether if while making assessment, Assessing Officer has m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power being quasi-judicial in nature, reasons must be such as to show that enhancement or modification of assessment or cancellation of assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to conclusion that order of Assessing Officer was not only erroneous but was also prejudicial to interest of revenue - Held, yes - Whether before exercising revisional powers, assessee must be called, his explanation sought for and examined by Commissioner, and thereafter, if Commissioner still feels that order is erroneous and prejudicial to interest of revenue, Commissioner may pass revisional orders - Held, yes - Whether if a query was raised during course of scrutiny by Assessing Officer, which was answered to satisfaction of Assessing Officer, but neither query nor answer was reflected in assessment order, that would not, by itself, lead to conclusion that order of Assessing Officer called for interference and revision - Held, yes CIT vs. Arvind Jewellers (2003) 259 ITR 502 (Guj.) Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1981-82 - Whether provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce department could not place anything to show that findings recorded by Tribunal were perverse or contrary to record, invoking of revision proceedings was unjustified - Held, yes CIT vs. Fine Jewellery (India) Ltd. [2015] 372 ITR 303 (Bom.) Section 37(1), read with section 263, of the Income-tax Act, 1961 - Business expenditure - Allowability of (Brand building expenses) - Assessment year 2006-07 - Assessee, engaged in business of manufacturing and export of jewellery, incurred certain expenses for creation of brand and claimed deduction of same as revenue expenditure - Assessing Officer allowed major part of amount claimed - Commissioner set aside assessment order under section 263 taking a view that expenditure incurred was capital in nature - Whether since (i) Assessing Officer had made specific enquiry on this issue during assessment proceedings and nature of expenditure was explained by assessee to him and (ii) view taken by Assessing Officer was a possible view, order of Assessing Officer could not be set aside in exercise of powers under section 263 - Held , yes 12.Respectfully following the proposition of law laid down in the above referred caselaw to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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