TMI Blog2023 (1) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing officer is unsustainable in law, based on the reasons cited above, which makes the assessment order erroneous as well as prejudicial to the interest of Revenue, hence we confirm the findings of ld PCIT and uphold his order. Appeal filed by the assessee is dismissed. - ITA No.117/SRT/2022 - - - Dated:- 16-1-2023 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Ketan Jagirdar, C.A For the Respondent : Shri Ashok B. Koli, CIT-D.R ORDER PER DR. A. L. SAINI, AM: By way of this appeal, the assessee has challenged the correctness of the order passed by the Learned Principal Commissioner of Income Tax-1, Surat (in short ld. PCIT ], in Appeal No. ITBA/REV/F/REV5/2021-22/1040920151(1), dated 16.03.2022 under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. Grounds of appeal raised by the assessee are as follows: 1) The learned Principal Commissioner of Income Tax-1, Surat (hereinafter referred to as the ld. PCIT ) has erred in law and on facts in assuming jurisdiction u/s. 263 of the Act. 2) The ld. PCIT has erred in law and facts in setting aside the original assessment made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D-19/377 Shilpa Ashok Modi Ashok Dhnsukhlal Modi ADHPM 6688 G AHSPM 2805 L B-07/454 Hemant Ramvilas Jain AALPJ 9974 B D-03/311 Hemant Ramvilas Jain AALPJ 9974 B 002/493 Naresh Jagdi Shchandra Vig ABJPV 9840 R 003/394 Manish Jagdishbhai Barot ABJPV 9840 R B-08/561 Ramchalsingh Rajput AAYPR 5138 A B-09/162 Sureshchandra Chandrashekhar Mishra AAYPR 5138 A B-02/436 Ritaben Anishkumar Shah AGVPM 643 E B-11/270 Santoshkumar Bhushan Khalimuni AGVPM 6433 E 5. On going through the details of flat sold, it was noticed by ld PCIT that assessee firm had sold more than one flat to single person which is in contravention to sub-clause (f) of sub-section (10) of the Section 80IB of the Act. However, while completing the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It can be seen from the above that the department has mistakenly considered same PAN number of different persons. You notice itself is a proof. There cannot be same PAN number to different persons. We have given correct PAN number of allottees mentioned in the notice. You can verify with your system also. Therefore, it is concluded that we have not sold multiple units to above mentioned persons. It seems to be just clerical mistake to consider same PAN for different persons. Therefore, it is not a violation of conditions prescribed u/s 80-IB of the Act for the above-mentioned persons. Further, we would like to submit the following: Flat No. Name Date of booking D-19/374 D-19/375 D-19/376 D-19/377 Shilpa Ashok Modi Ashok Dhansukhlal Modi 31/08/2007 B-07/454 D-03/311 Hemant Ramvilas Jain 06/02/2008 We would like to draw your kind attention towards date of booking of such flats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the 31st day of March, 2008 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if, - (f) in a case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely;- (i) the individual or the spouse or the minor children of such individual, (ii) the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta. 10.The Ld. PCIT noted that the assessee has furnished submission in light of clause-(e ) of Section 80-IB(10), which is regarding allotment to any person not being an individual, but this clause is inapplicable because the allotment is made to individuals and their family member. In respect to Flat No. D19/374 to D19/377 sold to Ms. Shilpa Ashok Modi and Mr. Ashok Dhansukhlal Modi and Flat No.B-07/454 and D-03/311 sold to Shri Hemant Ramvilas Jain. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel stated that in the assessment order itself, the Assessing Officer mentioned that he has examined the issue u/s80IB of the Act. Therefore it is not a case of lack of inquiry and Assessing Officer has examined the issue and came to the right conclusion. Therefore, the order passed by Ld.PCIT on the issue which are already examined by the Assessing Officer is not sustainable in the eyes of law and therefore order of ld PCIT must be quashed. 14. On the other hand, Learned CIT-DR for the Revenue submitted that there is complete non- inquiry in the assessee s case. That is, Assessing Officer has not made any inquiry. The Ld. CIT-DR also submitted that Assessing Officer has not adjudicated the facts in accordance with law and Assessing Officer allowed the claim of assessee without making inquiries. The Ld. CIT-DR also took us through paper book page No.303 and stated that agreement was made in the year 2010, and took us to paper book pages 167 and stated that the agreement was made subsequently. Apart from this, Ld.DR, to bolster his arguments, relied on the judgment of the Co-ordinate Bench of ITAT Delhi Benches in the case of DSIIDC Ltd. vs. PCIT-03, New Delhi in ITA No.2673-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er failed to look into the correct applicability of Section 80IA(4) in respect of the assessee s claim which amounts to erroneous and prejudicial to the interest of the revenue./the present case is covered by the decision of the Hon'ble Apex Court in case of Deniel Merchants Private Limited Anr. Vs. Income Tax Officer (Appeal No.2396/2017 order dated 29.11.2017). The Hon'ble Supreme Court held as under: In all these cases, we find that the Commissioner of Income Tax had passed an order under Section 263 of the Income Tax Act, 1961 with the observations that the Assessing Officer did not make any proper inquiry while making theism and accepting the explanation of the assessee(s) in so far as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry through and detailed inquiry. It is this order which is upheld by the High Court. We see no reason to interfere with the order of the High Court. The Special Leave Petitions are dismissed. Thus, in the present case the Assessing Officer has not properly adjudicated the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faithfully, Sd/- Karam Chand Dhama Circle 1(2), Surat 1. As you are aware that your case for AY 2017-18 has been selected in scrutiny under CASS and notice u/s 143(2) of the I.T. Act,1961 dated 16.08.2018 has been duly served upon you. Please furnish the following further details: 2. Please provide the complete list of persons to whom the flats have been sold since inception of project till 3103.2017 in MS Excel sheet with Name, PAN and address. 3. Please provide copy of sale deed regarding sale of all commercial space since inception of project to till date. 4. Please provide list of all sundry debtors with copy of ledger account of each exceeding Rs.1,00,000/-. Further justify the reason for not charging interest from them. 5. You are requested to submit the complete details on or before 22.11.2019. 6. Please note that no further adjournment of whatsoever may be will be granted as the assessment is getting time barred. It may please further be noted hat, if complete details are not furnish within the stipulated date, the assessment will be completed as per the facts and material available on record without further intimation. Sd/- Kar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eque number 67971 is submitted by the assessee. For each figure there should be separate cheque number. How one cheque number represents/ may include four figures? Vide assessee`s paper book page No.73, the bank statement shows figure at Rs.6,80,000/-. During the revision proceedings, u/s 263 of the Act such details were not filed before ld PCIT, hence these are new/fresh details before the Bench which were not even available before the assessing officer. We have called the assessment records and observed that even bank statement was not submitted during the assessment stage, only bank account numbers were submitted by the assessee (not the bank statement) before the assessing officer. By way of letter dated 30.04.2019, the assessee submitted bank details, which is reproduced below: 18. From the above, it is vivid that assessee has submitted details of banks stating their names and account numbers. We have examined the assessment records and noted that bank statements of the above banks were not before the assessing officer. Hence, assessing officer failed to examine the requirement of clause f of section 80(IB)(10) of the Act, which is the specific query raised by ld P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT in his revision proceedings, has never been examined by the assessing officer. 22. Let us take the guidance of judicial precedents laid down by the Hon ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of mind and assessing officer has not investigated the issue before him about clause f of section 80IB(10 of the Act. Moreover, there is no two possible views are available before the assessing officer, thus, the view taken by the Assessing Officer is not sustainable in law, as it is violation clause f of section 80IB(10 of the Act. Hence, based on these facts and applicable legal position on these facts, we are of the view that order passed by the assessing officer is erroneous and prejudicial to the interest of Revenue. 24. Our view is fortified by the Judgment of Hon`ble Delhi High Court in the case of NAGESH KNITWEARS P. LTD in ITA NOS. 591/2008, dated 1st June, 2012 ( 345 ITR 135(Del), wherein it was held as follows: 31. Further on 22nd May, 2012, an additional substantial question of law was framed which reads as under: Whether the Income Tax Appellate Tribunal (ITAT) has erred in setting aside the order passed by the Commissioner of Income Tax under Section 263 of the Income of the Income Tax Act, 1961? 32. In the two assessment years, the Assessing Officer had in the order under Section 143(3) accepted the computation made by the assessee under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2211/Del/2005 held that the Commissioner was not justified in invoking his power under Section 263 as the view taken by the Assessing Officer was plausible. They referred and relied upon Malabar Industrial Company Limited Vs. CIT (2000) 243 ITR 83 (SC) and the decision of Delhi High Court in Nabha Investments Pvt. Ltd. Vs. Union of India Others (2000)246 ITR 41. The tribunal also examined the case on merits and came to the conclusion that the addition was not justified in view of the circular issued by the Board. On correct interpretation of law, the assessee was entitled to include premium or profit on sale of export quota in Section 28 (iiia/b/c). Accordingly, the twin conditions i.e. order of the Assessing Officer should be erroneous and prejudicial to the interest of the Revenue, were not satisfied. 36. As far as Section 263 is concerned, we have examined the said Section in depth and detail in ITO Vs. D G Housing Projects Ltd. decided on 1st March, 2012, in ITA No. 179/2011 and observed as under:- 10. Revenue does not have any right to appeal to the first appellate authority against an order passed by the Assessing Officer. Section 263 has been enacted to empower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. 13. In the said judgment, Delhi High Court had referred to earlier decisions of the Supreme Court in Rampyari Devi Sarogiv. CIT (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal v. CIT (1973) 88 ITR 323 (SC), wherein it has been held that where Assessing Officer has accepted a particular contention/issue without any enquiry or evidence whatsoever, the order is erroneous and prejudicial to the interest of the Revenue. After reference to these two decisions, the Delhi High Court observed:- These two decisions show that it is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. 14. The aforesaid observations have to be understood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue . It is not an arbitrary or unchartered power, it can be exercised only on fulfilment of the requirements laid down in sub- section (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. 16. Thus, in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thesware Packing Products, 231 ITR 53 (SC)]. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. 18. It is in this context that the Supreme Court in Malabar Industrial Co. Ltd. v. Commissioner of Income Tax, (2000) 243 ITR 83 (SC), had observed that the phrase prejudicial to the interest of 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 interest of Revenue. Thus, when the Assessing Officer had adopted one of the courses permissible and available to him, and this has resulted in loss to Revenue; or two views were possible and the Assessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision; they have to be construed strictly. A person invoking an exception or any exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz. each such exception/exemption increases the tax burden on other member of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. Hence deduction u/s 80HHC has to be computed accordingly by reducing profit of business by 90% of the receipts from sale of quota rights. 8. x x x x x x x 9. Moreover, on perusal of the record, it is seen that the assessment was completed even though there were no details on record of export incentives received by the assessee during the year. The assessee was allowed the claim of deduction under Section 80HHC without even verifying as to whether the receipts on account of export incentive fall within the provisions of section 28(iiia/b/c) of the Act on merit the deduction. 10. In view of the above discussion, it is clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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